Broadcasters agree to 'reasonable' carriage fees

However, the carriage fees will be substantially lower than the current amount.

After a meeting chaired by the TRAI chairperson and including representatives from the MSO alliance, Indian Broadcasting Federation (IBF) and News Broadcasting Association (NBA), the NBA has announced that broadcasters have agreed to pay reasonable carriage fees to cable companies for carriage of their channels.

Carriage fee is the money that broadcasters have to pay to cable companies for carrying their channel. There has been an ongoing debate on the carriage fees, if at all, that should be paid by the broadcaster, and the fair amount that can be charged for this service.

News broadcasters have now agreed to enter into agreements with MSOs (multi-system operators) for an initial period of one year for the payment of carriage fees (inclusive of marketing fees, tiering fees, packaging fees or fees and charges under any other nomenclature) in the digitised areas, at a rate of 0.50 paisa-one rupee per set top box subscriber, per channel per year (widely known as cost per customer or CPC).

In its tariff order for April, TRAI (Telecom Regulatory Authority of India) had mentioned that there needs to be mandatory uniform carriage fees paid by the broadcaster to the MSOs. The NBA had opposed the TRAI decision and urged the regulatory body and the government to reconsider the proposal and, in fact, drop it altogether.

Broadcasters have paid large amounts as carriage fees to the MSOs for placement and carriage of channels, especially during the launch phase of a channel. A study, called Dii R2, by Chrome Data Analytics brought out the scenario and benchmarked the carriage fee spends across markets, cites and cable networks in the country.

The study revealed that for the central part of the country, the average CPC (cost per contact) for a newly launched channel is Rs 22.3, while for an existing channel, it is Rs 18.3. Also, in the East India market, the average CPC for a new channel is Rs 20.1, and for an existing channel, it is Rs 13.4. Likewise, for the new channels in the North, South and West India, the average CPC is Rs 18.9, Rs 9.2 and Rs 19.4, respectively. For the existing channels, on the other hand, it is Rs 14, Rs 6.9 and Rs 15.2, for North, South and West India, respectively.

Dii was based on deals done by broadcasters over the last one year. An average of six solo deals per cable network was taken into account and included investments for S-band and UHF (550 and below).

While placement fee has been specifically prohibited by a TRAI notification, concerns have been regularly expressed about the lack of clarity with regard to carriage fees. After the latest development, the new carriage fee charges of Rs 0.50-1 imply about 95 per cent drop in the amount to be paid by the broadcaster.

Pankaj Krishna, founder, Chrome Data Analytics and Media, says, "Broadcasters have always faced huge challenges towards drawing benchmarks and rationalisation of carriage fee spends. This seems to be the best possible deal for the broadcasters."

In the recent meeting, it was also decided that the broadcasters and MSOs will enter into agreements on carriage fees within the next few days to ensure a smooth transition into the post-digitisation phase in the four metros.