The Telecom Regulatory Authority of India’s (TRAI) latest move to bring in amendments in the tariff order is expected to disrupt the subscription revenues monetisation models of broadcasters, cable operators and DTH players.
According to analysts, while TRAI’s move would offer some relief for consumers from the spikes they have seen in the cable and DTH bills in the past year, it will have an adverse impact on the revenues of the broadcast and cable industry.
One of the key changes introduced by the regulator is the cap on discounting of bouquet prices at about 33 per cent compared to the sum of the a-la-carte pricing of TV channels which form part of the bouquet. TRAI also said that only TV channels priced at ₹12 or less can become part of a bouquet compared to the earlier ceiling of ₹19.
Abneesh Roy, Executive Vice-President-Institutional Equities, Edelweiss Securities, in a research note said this could lead to downward price revision of flagship channels of the broadcasters as most of them have an a-la- carte price of ₹19 resulting in a slowdown in the subscription revenue growth of broadcasters.
Analysts and industry players also said that implementing caps on discounting of bouquet prices is likely to have a bigger impact on niche or less popular channels and may result in reduction of the size of bouquets from about 8-10 channels to 3-4 channels.
Ashish Pherwani, Partner and Media & Entertainment Leader, EY India, said, “Depending on the strength of each channel there could be an impact on either the reach or subscription revenues if these price caps are implemented.”
TRAI observed that post the implementation of the tariff order, the subscription of popular channels on an a-la-carte basis is less than 90 per cent compared to bouquet-based subscription.
Karan Taurani, Vice-President-Research (Media), Elara Capital, said consumers may now look at opting for a-la-carte subscription of channels due to price correction.
“Advertisers will also be in a wait and watch mode during this transition phase of the industry, which is likely to have an adverse impact on TV ad revenue growth in the first half of the calendar year,” he added.
Meanwhile, the cap on network capacity fee to ₹160 excluding taxes per month for more than 200 channels and lower NCF for second or third TV connection in multi-TV homes, will also help reduce cable and DTH bills. But industry sources said implementing this norm could pose a challenge for distribution platform operators.