TV advertisers blast Trai, say new regulation will make their operations unviable

Television broadcasters and advertisers on Tuesday came out strongly against the ham-fisted manner in which the Telecom Regulatory Authority of India (Trai) has pushed through its decision to arbitrarily slash advertisement time to a mere 12 minutes an hour. "The decision was taken at the last moment-a day before J.S. Sarma retired as Trai chairman. It was done in a hurry," lamented Rohit Gupta, president, Sony Entertainment. "We have already put across our view to Trai. The telecom regulator should have considered our problems and we should have been heard. We will take a joint stand on the issue soon," he added.

TV channels are opposed to the Trai decision as their operations would become financially unviable if the advertisement time is slashed. The channels have to incur huge costs in preparing their programmes and uplinking them to the satellite for transmission to viewers.

The reduction in advertisement time will result in a sharp decline in earnings and they will not be able to meet production costs. This is especially true of TV news channels most of which are running at losses or merely being able to break even. After Trai released a consultation paper on advertising in March, TV broadcasters had pointed out to the telecom regulator that there was a Supreme Court ruling which had held that the restriction on advertising space in newspapers would lead to reduction in its revenue and was in violation of Article 19 (1)(a) of the Constitution. This Article ensures the fundamental right of freedom of speech and expression. Since news channels also play the same role as newspapers, this rule should apply to them as well.

A senior official of a prominent news channel told Mail Today that "the Trai decision in effect interferes with the freedom of the press". The TV channels are of the view that advertising has to be determined by market forces and any attempt by Trai to interfere smacks of high-handedness and is arbitrary in nature.

Advertising and marketing experts have also criticised the Trai move. Most of them termed it as a regressive step that could lead to a rise in airtime rates ultimately affecting consumers. "I think controlling the number of minutes is an issue which the market should decide and not the regulator. If a channel has too many ads, chances are that clients will shun the channel and so will viewers. Broadcasters know this "Lakshman Rekha" and ensure that the mix is just right. Imposing constraints will not improve broadcast quality or content," said Ambi M.G. Parameswaran, executive director and CEO, Draftfcb + Ulka.

"The restrictions would be counterproductive as reduced advertisement time would push up airtime rates affecting the bottom lines of companies (advertisers). This will further fuel inflation. The companies will pass on the burden to consumers. Then how can it be consumer friendly?" asked Jagdeep Kapoor, CMD, Samsika Marketing Consultants. "Ads subsidise programming and when advertising time is curtailed, it would substantially push up production cost. The channels will be forced to increase the rates or will shut down," Kapoor added.

A day after the Trai notification, TV channel stocks plunged in the market though the Sensex had closed with a gain of 0.69 per cent.

Courtesy: Mail Today