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Help Get ready for the network slugfest
Last week, the Indian Parliament passed a Bill that amends the Cable Television Networks (Regulation) Act of 1995. This will make addressable digitisation of cable mandatory, and meet the deadline of December 2014. So what really will happen when all Indian TV homes are digital?

There will be more pay revenues, less carriage fees, more choice and so on. These are the results the amendment, rightly, seeks. There is, however, a lot of subtext. Full digitisation will create large behemoths in control of access and audiences. That means we need a debate on an independent-of-the-government media regulator urgently.

Here is why. The Indian TV market is structured differently from most others. There is a fragmented cable industry, revenue-choking price regulation and a hyper-competitive broadcast market with over 650 channels. The cost of distributing a channel and getting pay revenues is huge, as is the effort involved in getting advertising. Therefore, most large broadcasters find that having a bouquet of channels offers better economies of scale.

Star used Star Plus as a kernel to create a portfolio of 27 channels like Star News, Star Pravah and so on. They straddle regions and genres, creating a network that meets the entertainment needs of a heterogeneous market. According to TAM media research data, the network commands a leading 18.55 per cent of the total time that audiences in India spent on television. Zee, Sun and some other networks have created similar portfolios. Last week, there were reports that Network18 is in merger talks with ETV. In all probability, Network18 will dilute equity and take a lot of risk to become a full-fledged national network. This, the group believes, will prepare it for full digitisation.

Post-digitisation, a few cable companies (MSOs) and DTH operators would essentially control access to India’s 142 million TV homes — and, therefore, the key to Rs 33,000 crore in advertising and pay revenues. Think of 10-odd operators with 10-20 million homes apiece. Even if one of them switches off a broadcaster, he loses a chunk of the audience. A fully digitised TV market will be like any mature retail market, where the retailer holds the aces. And the big suppliers (broadcasters/aggregators) that can bargain the hardest are the ones that will thrive.

So far so good. That is how most markets have evolved. But here is the catch: there is no equivalent of a Federal Communications Commission (FCC, US) or Ofcom (UK) in India that can monitor the glitches the coming consolidation could bring on a day-to-day basis. Nor is there regulation that makes the path clear in case of conflict.

In the US, for instance, a shift like that came about only with proven cross-media regulations in place. In India, there are very few cross-media rules, or other systemic levers, that check monopolies from being formed. Already several broadcasting groups own stakes in cable and DTH; others own newspapers and magazines. But no regulator has taken this up. There is a Telecom Regulatory Authority of India paper on cross-media regulation, but no one has paid attention to it. Politicians are happy raking up content regulation as an issue, instead of taking a long, hard look at structural issues.

To its credit, this ministry has passed the cable ordinance. But without the safeguards that a good, robust media regulation provides, the danger of monopolies or of misuse always looms. Especially given that over half of India’s cable networks are owned by politicians or their relatives, and roughly one-third of the 132 news channels are owned by companies interested in using them to curry favour or for influence, and not as media vehicles.

Imagine a scenario where a politician-owned or backed company has dominating market share across distribution, broadcasting, newspapers and radio. It could sway public opinion any which way. However, cross-media caps cannot be arbitrarily decided by some bureaucrat. They involve complicated maths to determine share of voice, and so on.

This is not just about cross-media caps. It could be about giving infrastructure status to DTH, cable networks or theatre chains, setting norms for advertising time, figuring out whether politicos or religious bodies can own TV channels and so on. Then there are equally big and small issues in film, radio, print or the internet.

All this needs a regulator that looks at everything to do with the business and non-business (social, cultural, ethical etc) aspects of this $17-billion industry. Till there is an independent Sebi-like body worrying about the state of the media markets in India, most regulation, however well-intentioned, could simply end up creating more complications.

Source: Business Standard

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