B'casters brace for 10+2 ad cap in Oct; hike ad rates by 15-20%

With the Telecom Regulatory Authority of India’s (TRAI) diktat on 10+2 restriction on ad inventory set to be in place from October 2013, broadcasters are looking to offset the expected revenue losses from this order. At present, 20 minutes of ads are being allowed in a clock hour of programming.

In the meantime, news channels have appealed to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against TRAI’s order and have asked the Tribunal to come up with a fresh resolution. TDSAT has given two weeks time to TRAI to respond to the appeal filed by the broadcasters.

As a result of the impending 10+2 ad cap, broadcasters have already started to increase their ad rates.

One of the leading Hindi broadcasters admitted to exchange4media, “Yes, we have increased our ad rates by 15 per cent till date. But we are doing this in a gradual manner as we are expecting a positive decision from TDSAT.”

Speaking further, the broadcaster said, “If the 10+2 ad cap comes into place in October, then we will increase our ad rates by more than 30 per cent. We are closing all new deals with different clause, which will help in garnering better revenues. All the deals will be dissolved if there is any amendment in 10+2 ad cap.”

It is to be noted here that it is not just the news channels that are increasing their ad rates; some infotainment channels as well as GECs too have started to hike their ad rates. On an average, these channels have so far increased ad rates in the range of 15 per cent to 20 per cent.

In the backdrop of the implementation of the regulation on the cap on advertising inventory, Hindi GEC Colors has decided to increase its advertising rates by almost 30 per cent.

In a release issued earlier, Raj Nayak, CEO, Colors had explained, “The rationale is that we as a broadcaster have still not seen the full impact of digitisation in the form of either a fair share of reduction in carriage fees or subscription revenues. Given that we are a responsible broadcaster and intend to follow the guidelines set by the regulator, we believe that to stay on course and in order to meet the revenue objectives, we are left with no option but to increase ad rates.”

He further said that in the current scenario, there is already a shortage of ad inventory on GEC channels, with most of them having oversold. “With the cap coming into play, the pipeline is only going to get narrower and change the supply demand ratio,” he added.

Nayak said, “We share a tremendous relationship with our advertisers and all existing deals will be honoured. We will take precautions to try and balance the price hike in a manner that works for all stakeholders.”

Talking to exchange4media, one of the top executives of a news channels said, “We have increased our rates by 15 per cent and will stretch it to 30 per cent in the coming months.” He further said, “We are signing all the new deals only till September 30.”

There are several channels that are not ready to reveal whether they have hiked their ad rates or not, however, if industry sources are to be believed, the channels have revised their ad rates and will continue to do so in the near future.

These are tough times for the broadcasters. The past few weeks saw a three-way impasse involving broadcasters, TAM Media and advertisers regarding television measurement and frequency of ratings release. After intense debates, IBF, AAI, ISA & TAM have finally arrived at a consensus on audience measurement.

Now the broadcasters have to brace up for the restriction on ad inventories, which will have a significant impact on their revenues. Many believe that the timing couldn’t have been worse, since October is festival time and channels look to making up for any revenue shortfalls during these festive months.