Niche channels back in bouquet after Bombay HC order on NTO 2.0 offers relief

The New Tariff Order (NTO) 2.0 had cast a shadow on the reach of niche channels, especially those offering English entertainment.

The big broadcasters had to take out these channels from their bouquet offering as the NTO conditions made it near impossible to make not-so-popular channels a part of their bouquet. This had pushed the niche channels, mostly English entertainment ones, to the verge of closure.

With the Bombay High Court last week striking down the second part of twin pricing conditions of the amended NTO 2.0 by the Telecom Regulatory Authority of India (TRAI) as unconstitutional, while upholding the constitutional validity of the New Tariff Order, the broadcasters feel a little relieved.

The court, however, upheld the cap of Rs 12 as well as the first twin condition, which translates into a cap on discount of up to 33% for a bouquet.

The twin pricing conditions were:

1. The sum of the a-la-carte rates of the pay channels (MRP) forming part of a bouquet shall in no case exceed one-and-a-half times the rate of the bouquet of which such pay channels are a part.

2. The a-la-carte rates of each pay channel (MRP), forming part of a bouquet, shall in no case exceed three times the average rate of a pay channel of the bouquet of which such pay channel is a part.

A High Court bench led by Justice A A Sayed pronounced the order verbally on June 30, the details of which in the form of a written order is yet to be published. The bench had completed the final hearing in October last year on pleas filed by TV broadcasters challenging the new tariff rules (NTO 2.0) published by the authority in January 2020.

The order is apparently a win-win situation for both TRAI and broadcasters. The authority has all the right to claim victory because the Tariff Order was upheld as constitutional first by the Madras High Court, then Supreme Court and recently by the Bombay High Court. But their attempts to control the discount on bouquet were thwarted by all the three courts.

On the other hand, broadcasters are claiming it as a victory from the business point of view and are preparing to form the bouquets the way they want.

“Our pain point was the cap of Rs 19, which was arbitrarily reduced to Rs 12. The second pain-point was the twin condition, especially the second part of it, which was struck down by the High Court as unconstitutional. This is the main victory for us. The same clause has been subjugated by the Madras High Court, the Supreme Court and now the Bombay High Court. All three courts have said the same thing. That means we are pointing out the fault line again and again and as a regulator, you are not considering even as all three courts have said the same thing. TRAI may claim victory constitutionally, but commercially, we got what we wanted,” said a senior executive at one of the top broadcast networks on the condition of anonymity.

“However, upholding the Rs 12 cap on MRP of a channel, which is a part of any bouquet, and the first condition, is a setback for us. Our appeal in the Supreme Court will be on this point only. We are yet to decide at the IBF level but we are unlikely to ask for a stay because another year will go for a toss for the business. The court has given a window of six weeks,” the executive said.

A top executive at another large broadcast network told BestMediaInfo.com that though the detailed order is awaited, apparently there is no need to follow the formula after the court struck down the second condition of the twin conditions. The Rs 12 cap was also to be used if the formula was in place. Now that the formula has gone, we will be able to package the way we want. This also opens the door for the so-called not-so-popular channels to be a part of any bouquet. TRAI’s fight was evidently centred on keeping these no-so-popular channels out of bouquets and they have lost this battle,” said the executive.

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