Broadcasters are up in arms against the Telecom Regulatory Authority of India's order setting the price of a pay channel at Rs 5, and are likely to move the telecom tribunal in this regard.
"The directive is incomprehensible. It will certainly deter broadcasters that are planning to enter India. We have to look at our options, including moving the TDSAT against the order," said R C Venkateish, managing director, ESPN Software India.
The Trai order, which will bring down the price of a pay channel by at least 30 per cent, not only caps channel prices, but also requires broadcasters to share 55 per cent of their subscription revenue with cable operators.
With their subscription revenue dipping, broadcasters have to depend on advertisement revenue. But the government has also capped the advertisement time to 12 minutes for every hour of programming. The only hope for broadcasters is that the loss in revenue could be set off by more subscribers.
Broadcasters pointed out that the price ceiling set by the regulator had not accounted for the varying costs of content creation in different genres like sport, films, and general entertainment.
"One cannot have one price for all channels as it completely glosses over the differences in genres," said Smita Jha, principal consultant, PricewaterhouseCoopers.
"Broadcasters will bleed. For no product can the government regulate both prices (cap at Rs 5) as well as margins," said a Zee Networks executive.
Sameer Manchanda, joint managing director, Global Broadcast News, wondered: "Why not leave the pricing to market forces? Moreover, the cost of content creation and procurement could be very high for a sports channel. How does that get recovered in a formula like this?"