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Uncertainty among TV advertisers as TRAI continues to extend new tariff regime deadline

According to industry experts, the constant change is making it difficult for the advertisers to plan strategies for the year. As of now, they are sticking to the regular business model and are playing safe with FTA and popular channels

The Telecom Regulatory Authority of India (TRAI) had declared the implementation of the new framework for broadcasting and cable services with an aim to bring in transparency and uniformity in the pricing of TV channels.

But since its announcement, the authority is revising its deadline constantly, which has resulted in uncertainty in the media industry. Earlier TRAI had fixed December 29, 2018 as the deadline for the implementation, which was extended to January 31, 2019 to ensure a smooth transition. It was further extended to February 17 as local cable operators (LCOs) and distribution platform operators (DPOs) were not ready.

Now, TRAI has once again extended the deadline to select TV channels to March 31 as DPOs and LCOs said subscribers were facing difficulties in selecting channels and bouquets of their choice.

According to industry experts, constant changes in deadline are making it difficult for the advertisers to plan strategies for the year. The television industry is predicted to witness 15% ad growth but the impact of TRAI’s new regime is yet unknown.

BK Rao

BK Rao, Marketing Head at Parle, said the changing deadline is causing lot of turmoil, difficulty and anxiety among advertisers when it comes to media planning. Hence till the new regime is fully implemented, the advertisers are planning to follow their regular media plan.

Rao says, “When we discussed with our agencies about the plan to launch the Kiss Me campaign, there were concerns that the deliveries might be affected as the launch coincided with that of TRAI’s. Now, since it has been postponed, things are settled and we are not going to suffer. But we took the plunge consciously knowing that this might impact our deliveries. It was a risk factor that we took.”

The broadcasters and advertisers are also upbeat because of the upcoming general elections, Indian Premier League 2019 and World Cup 2019, which are the tent-pole TV properties.

While advertisers are continuing with their regular media plan, experts believe broadcasters might suffer the brunt of this uncertainty. The broadcasters are said to be under scrutiny in terms of deliverables to the advertisers.

When advertisers buy impact properties such as IPL and World Cup 2019, they make deals with the channels and determine the deliverables on the basis of estimated GRPs. As not all properties are successful, the advertisers make a deal on an assumption and if any channel fails to deliver the decided GRPs, it would compensate them.

Now with IPL and World Cup coming, Rao says chances are high that broadcasters might have to work on a compensation plan, which is not a positive scenario in the current market.

“I feel that now focus is on broadcasters on how they are going to address this issue because they are very well aware that it might have a negative impact. Star India has IPL, which is a prestigious event and involves lot of money, so they may not want to take a risk. If there is around 40% to 50% delivery then it will have a major impact on the relationship with the advertisers. As advertisers might say, ‘you increase ad rates over the previous year but you are not being able to deliver’. In such a case, the broadcaster will have to make sure that the advertisers are benefitted and have to come up with a compensation plan.”

Apart from the continuous extension of deadline, there is also confusion over the bill consumers have to pay every month. While TRAI says the monthly bill will witness a drop, Crisil has reported a rise in the TV viewing bills under the new tariff regime. Several subscribers are claiming an increase in their monthly bill over previous payments.

Rajiv Dubey

Rajiv Dubey, GM, Dabur India, said, “Till March 31, it is going to be status quo and thereafter, if there is any change, it will be felt. The sense that one is getting is that the process of conversion is very slow. Also, there is confusion within consumers as TRAI has said the bill will come down but the Crisil report shows that it will go up. So based on this, we can say that there is a lot confusion in the market right now.”

The advertisers also think that it is not advisable to keep a budget aside for TRAI as the deadline keeps changing. They believe the free-to-air (FTA) channels and popular pay channels are a safe bet as the long tail channels are likely to get dropped.

Dubey said that since till March 31, no change is expected and media planning won’t get affected. “Only when data starts coming in, one can take a call on what a channel will go through and if a blackout is happening,” he added.

A leading cable operator said the tariff regime is one of the big changes after DAS implementation, which is why a bit of uncertainty is expected. However, another operator said the industry is almost ready with the new regime. “Everything is new for subscribers as well as operators. Hence, for a smooth transition, it is necessary to give operators some time. Right now it is a wait-and-watch scenario for everyone and the result and impact of the regime will be determined once it is implemented. The current scenario is similar to the DAS situation. Even then, extensions were granted by the authority,” the operator said.

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