The Hindu Business Line : CAS delay to hit channels' revenues

THE staggered implementation of the Conditional Access System (CAS) is likely to hit revenue models of both pay channels and free-to-air (FTA) broadcasters.

Free-to-air channels such as SAB TV, Sahara TV and Eenadu had pitted their hopes on increased advertising revenues in a post-CAS environment. "Since our channels would have been part of the basic tier, we had expected that our viewership in the metros would go up. With CAS being deferred all our aggressive plans for the forthcoming festive season have been impacted," said an official from a FTA channel.

Meanwhile, pay channels would also have to take a hit in revenue.

For August, when the Government has asked these broadcasters to waive their subscription fees, channels will be deprived of this revenue stream. And this is expected to continue till CAS is completely rolled out.

"We will lose a lot of money initially. But once the rollout begins, if from a notified area we were getting only 20 per cent declaration, and the penetration of set top boxes is 40 per cent, we will be getting higher revenues," said a Star India official.

And it is not just subscription revenues that would be hit.

Advertising industry sources said that while media plans and spends for the months of July and August would be unaffected, strategies would have to be reworked for the festive season beginning September.

"September onwards, once CAS rolls out advertising revenues could be slightly hit. While it is unlikely that rates would be brought down, but there could be some bonusing or deals being reworked," said the Star official.

However ad industry officials also maintained that a large portion of advertising is targeted at the non-metros. "Both Chennai and Kolkata to a large extent are markets where free-to-air channels dominate. So it is only the advertisers targeting pay channel viewers in Mumbai and Delhi who would have to rethink their plans. However, most advertisers would finalise deals with some safety or exit clause," said a senior media planner.

According to Mr L.V. Krishnan, CEO, TAM India, advertising on pay channels during the festive season would depend on set-top boxes (STB) prices and penetration, content on pay channels and its prices, promotions that channels do to get viewers interested and consumer education on CAS.

TAM to follow AC Nielsen

THE implementation of CAS will see rating agency TAM India provide three sets of data to broadcasters.

Speaking to Business Line, Mr L.V. Krishnan, CEO, TAM India said, "Currently there are two sets of data available — one for the cable and satellite (C&S) homes and another covering terrestrial homes. Post-CAS pay channels would receive data for both C&S homes and CAS homes, while data covering terrestrial homes would remain unaffected."

As CAS rolls out in different zones, panels would be formed to cover homes in that area. The rating agency will use the international methodology followed by AC Nielsen worldwide.

On the issue of STB penetration, Mr Krishnan said that currently there are about 6.6 million C&S households in the four metros. While Chennai and Kolkata are likely to be least affected by CAS (these are FTA markets), in Mumbai and Delhi 75 per cent watch Hindi pay channels.

"So there are over three million potential CAS households. In these cities about 0.7-1 million households own colour televisions, refrigerators and washing machines and are potential STB consumers," he added.

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