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Efficacy of new TV channel pricing regime would depend on SC verdict on 15% discount cap

Efficacy of new TV channel pricing regime would depend on SC verdict on 15% discount cap

Broadcasters across the country are shelling out crores on full page advertisements promoting their respective channel bouquets - the bouquets are now being made by the individual broadcasters and not the distributors.

The TRAI ruling on television channel pricing is indeed a consumer-friendly move, which would enable consumers to buy only those channels that they wish to watch. So, if you are a sports lover and an also an English movie buff, you could subscribe only to those particular channels and needn't invest in the Hindi entertainment or regional movie channels the distributor would have in any case offered as part of a larger bouquet.

The new tariff system that will come into being in the New Year does seem transparent. However, broadcasters across the country are shelling out crores on full page advertisements promoting their respective channel bouquets (the bouquets are now being made by the individual broadcasters and not the distributors). Star India was the first to announce its bouquet. While its pack of standard definition channels would be available to the consumer at Rs 45 per month, its premium HD channels would come at Rs 120 per month. Similarly, Viacom 18 has come up with a daily pricing ad, which says that is bouquet of channels will be priced at Re 1 per day.

But isn't the idea behind launching a-la-carte pricing to enable the consumer not to subscribe to channels she doesn't want to watch? By pushing bouquets isn't the consumer still being pushed to buy channels which she doesn't want? The bouquet pricing is far lower than the a-la-carte pricing. A HD sports channel or a popular channel like Star Plus would be priced at Rs 19. So if a consumer were to buy individual channels, her pay out would be at least 35-50 per cent higher than subscribing to a broadcaster's bouquet. For a broadcaster, pushing a bouquet makes more sense, as along with its popular channels, it will also push its not so popular ones into the consumer homes (higher the reach higher is the ad revenue).

So, doesn't this defeat the purpose of transparent pricing that TRAI is trying to drive? "The new tariff regime is surely in the right direction, but its efficacy will depend on the 15 per cent discounting cap on which the Supreme Court has to give its verdict," says Pankaj Krishna, CEO Chrome DM.

The TRAI ruling mandates broadcasters not to discount more than 15 per cent in its bouquet pricing. The discounts offered currently are much higher, as the broadcasters have managed to get a stay on the discounting mandate from the Madras High Court.

TRAI has appealed to the Supreme Court to reinstate the 15 per cent discounting cap mandate. So, if the Supreme Court favours the TRAI mandate, the challenges for the broadcasters to push their not so popular channels could multiply.

As the tug of war between the regulator and the broadcasters continues, the broadcasters are getting ready to aggressively market their offerings, as the consumer is soon going to have the freedom to choose.