Star, Zee, Sony, Viacom18 re-enter FTA battlefield

This will dramatically change the market dynamics and grow the free-to-air space. How will it impact Dangal and new entrant Shemaroo?

When it comes to entertainment on television, it is often an encounter between the predator and the prey, or David versus Goliath. The free-to-air space (FTA) space in Indian television is about to get more entertaining. The ‘big daddies’ in the media and entertainment industry - Star and Disney India, Zee, Sony, and Viacom18 - have all bought slots in the government's DD Freedish. This marks their re-entry into the FTA space, which they had exited at the beginning of 2019.

"We knew they would make a comeback, but we thought it would be around 2021," says Hiren Gada, CEO of Shemaroo Entertainment, which recently launched a Hindi FTA general entertainment channel (GEC), Shemaroo TV.

Manish Singhal, MD of Enterr10 Network, which owns the current market leader Dangal TV, feels this move will help the FTA space, in general. "When the giants come in, they come in with viewers. When they left the space, they took a lot of them (viewers) away," says Singhal.

According to EY estimates, the FTA ad spend shrank by at least Rs 1,000 crore after the likes of Zee Anmol, Sony Pal, Star Utsav, and Colors Rishtey went the pay TV way. The broadcasters decided to add a fee to the erstwhile free channels because of the Telecom Regulatory Authority of India's (TRAI’s) new tariff order (NTO), which came into effect in February 2019.

The NTO prohibited broadcasters from putting free and pay (TV) channels in the same bouquet. The likes of Star, Zee, Sony, and others decided to pull off their FTA channels and put them in bouquets to woo subscribers with heavier packs. These channels were available in the 10 paise to Rs 2 (a-la-carte) price range for cable and DTH subscribers, but weren’t available on DD Freedish, for which the subscribers don’t pay any monthly fee.

In January 2020, TRAI recommended certain amendments to the NTO, mandating broadcasters to change a lot of things, one of which was bundling. The TRAI recommendation said, "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 half times the rate of the bouquet of which such pay channels are a part."

"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." So, the channels priced at 10 paise can no longer be in a bouquet with the ones priced at Rs 19. Though ‘NTO 2.0’ is yet to be implemented, an expert feels it is one of the reasons the broadcasters are back in the FTA fold.

As per industry estimates, about Rs 1,500 crore to Rs 1,800 crore of advertising money (total ad spend on TV is Rs 34,100 crore) is spent in the entire FTA space, and GECs command a lion’s share of that. "See, before launching, we looked at various scenarios, and one of them was the major broadcasters returning. Because of the COVID-19 scenario, a few channels could not pay the fee, and those got vacated…," says Gada.

An analyst with a large consulting firm feels the increasing competition will get new advertisers in the space. However, he also says that the content cost will go up, and put the non-network channels under pressure. Dangal, Shemaroo, B4U, and others rely heavily on the content licensed from other broadcasters.

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"As they start looking at FTA space more seriously, they will stop syndicating the content to competitors. When that happens, the non-network channels will have to create their own content, which will drive up the operation cost, making it more challenging for them to survive," says the analyst.

FTA channels run library content. Dangal aired shows licensed from NDTV Imagine, Shemaroo has a few from Star Plus, and other channels. Such shows first air on pay TV channels, and then they’re put in the FTA space. "We follow a 40-60 content strategy. We create 40 per cent of the content ourselves, and the remaining 60 per cent is licensed from all over the country. I don't see this as a major content challenge for us," says Singhal.

Also Read: Shemaroo launches general entertainment channel, "We're missing out on advertiser money": Hiren Gada

Gada adds, "It isn’t necessary that the content created for pay TV will work well on the Freedish, too."

Both Gada and Singhal are of the opinion that there could be some immediate impact on the viewership and advertising revenue as more players will compete for the same set of viewers and one advertising pie. "Gradually, the pie will grow bigger," opines Gada.

Singhal says the entry of networks will make the FTA space stronger. "When you compete with the likes of Star, Sony, Zee and others, you grow your skillsets. It helps you in the long run. It also puts us in a much stronger position when it comes to negotiating with the advertisers," he says.

So, both Gada and Singhal seem up for the competition. Pay TV platforms, on the other hand, have a lot at stake. If they go too heavy on FTA, they might lose their pay TV advertisers. A media planner says, "A 10-second slot during a leading prime time show on Star Plus, or Zee TV, could cost up to Rs 1.5 lakh, whereas on FTA channels, it is not more than Rs 10,000 ever."

For some, it’s all about balancing, while for others, it’s about survival. Overall, it looks like the TV entertainment space in general may/will only get richer.