Oct. 02--MUMBAI -- Confusion marked the self-imposed deadline for television channels to ensure they didn't carry more than 12 minutes of advertising every hour, with some channels implementing this; some advertisers remaining locked in negotiations with channels over the 30-35%, sometimes 50% increase in ad rates they have effected to compensate for lost ad time, and other advertisers going off the air altogether.
In May, the Telecom Regulatory Authority of India (Trai), which oversees the broadcast business, said channels shouldn't have more than 12 minutes of advertising per hour of programming, with two of these 12 minutes being reserved for the channels to promote their own programmes.
The Indian Broadcasting Foundation, a grouping of TV channels agreed to adopt Trai's directive and itself suggested a deadline of 1 October. Since then, some channels have increased ad rates, and the news channels have sought exemption from the directive that could spell doom for them.
The channels have argued that the process of digitization -- channels will be viewable only if consumers have a set-top box that decrypts signals -- isn't yet complete.
Digitization will make it possible for channels to collect subscription revenue. Otherwise, they are at the mercy of cable operators, some of whom routinely under-report subscriber numbers.
Despite the opposition, and a remark by India's information and broadcasting minister Manish Tewari that the news channels did seem to have a case (unlike sports or movie or entertainment channels, almost all of their revenue comes from advertising and next to nothing from subscription), it was always clear that the 12-minute cap would be enforced with the three big networks Star India, Viacom18 and Zee Entertainment Enterprises Ltd (ZEEL) supporting it.
"It is a directive from the regulator and way back in May, IBF had agreed to implement the ad cap. Star India will honour that commitment," said Uday Shankar, chief executive officer, Star India. Ashish Sehgal, chief sales officer at ZEEL, said the network was also following the law and had implemented the 12-minute ad cap.
Mint couldn't immediately reach the spokesperson for Viacom18.
Beginning Tuesday, Star India, Viacom, and Zee have cut down ads on their channels.
However, for the channels as well as for the advertisers, the real test will begin at the start of the festival season and at the end of the inauspicious 15-day shradh period in North India on 4 October, a period during which advertisers reduce their presence on air.
"A number of advertisers are expected to launch new campaigns after the shradh period ends," said Sehgal of Zee.
That is when broadcasters will start picking partners, based on what advertisers are willing to pay them for the limited inventory. "Going forward, we will be focusing more on high-yield clients rather than low-yield," he added. High-yield clients are essentially advertisers that pay more for advertising, against other large regular advertisers, typically consumer products companies, that tend to beat down ad-rates as they buy ad-inventory in large volumes through the year.
"Yield is important, but the size (of account), relationships (with clients) and seasonality will be taken into consideration. Having said that, one has to appreciate the fact that when there is a drop in ad inventory and assuming that advertisers are willing to pay us what we want, we will still not be able to accommodate all the advertising of all advertisers," said Shankar of Star India.
The increase in ad rates -- by 50% in some cases -- isn't going down well with advertisers.
"The economy is sluggish and to increase ad prices by anywhere between 30-50% is unreasonable. The fact is that such a steep increase in prices is not good for the television industry in the long run as it is bound to drive out the smaller advertisers," said a senior executive at a large consumer products company who spoke on the condition of anonymity.
"I don't think clients are in the mood to entertain rate hikes. The economy is slowing, and the circumstances are not conducive for hikes as many businesses are under immense pressure," added Ashish Bhasin, chairman-India, CEO- South Asia, Aegis Media.
Bhasin added that clarity on the ad cap and who would be exempt from it will emerge next week.
Trai first issued the quality of service norms in May 2012 but the channels didn't comply and challenged the jurisdiction of Trai in the matter in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT).
However, later, the broadcasters agreed to a phased shift to the limit.
From 1 July, every television channel that offered news services confined advertising to 20 minutes per hour, while all other channels limited it to 16 minutes.
Beginning October, the channels were supposed to follow the 12-minute rule.
However, before that, Trai took at least 14 broadcasters to court for not following the advertising limits notified by it.
Trai, the regulator of telecom and broadcasting sector, lodged cases against these television channels with the chief metropolitan magistrate at the Patiala House courts in Delhi on 16 August.
The News Broadcasters Association (a grouping of news channels) whose member channels were taken to court, immediately went to TDSAT, the broadcast and telecom tribunal, that stayed the implementation of the Trai mandated ad cap on 30 August, asking the regulatory authority not to take any "coercive" steps up until the next TDSAT hearing on 11 November.
According to a member of IBF, even TDSAT did not say that the law was not enforceable.
"All it said was that coercive action could not be used against the television channels. The fact of the matter is that sooner or later broadcasters will have to fall in line and follow the law," this person added, asking not to be identified.