Relieved over striking down of 2nd Twin-Condition, broadcasters await clarity on order
Industry insiders, however, feel the implementation of NTO 2.0 is unlikely to happen as both broadcasters and TRAI are likely to approach the Supreme Court
After a long wait of a year and a half, the Bombay High Court (HC) on Wednesday pronounced the judgment in the writ petitions filed by several broadcasters and the Indian Broadcasting Foundation (IBF) challenging the Telecom Regulatory Authority of India (TRAI)'s New Tariff Order (NTO 2.0).
In its ruling, the court has set aside TRAI's stipulation that mandated that MRP of any a-la-carte pay channel, forming part of such a bouquet, shall in no case exceed three times the average MRP of a pay channel of that bouquet. The remaining stipulations in NTO2.0 have been upheld.
Now, to form bouquets, a broadcaster will need to ensure that it doesn't put a channel that is priced above Rs 12 in a bouquet, and that the sum of MRP of a-la-carte pay channels in a bouquet shall in no case exceed 1.5 times the MRP of the bouquet. For clarity, there is no limit on pricing if a channel is not part of a bouquet. The bench has also observed that TRAI will not take any coercive steps for six weeks to implement the remaining part of NTO 2.0, which has been upheld.
Reacting to the court order, a senior executive of a leading channel said the striking down of the second Twin-Condition is a significant victory for the broadcasters.
"While the constitutional challenge may have failed, the striking down of the second twin-condition is a significant victory for the broadcasters. The second Twin-Condition had the effect of severely restricting the ability of the broadcasters to form bouquets of their channels," said the executive.
In their petition, the broadcasters had argued that even the cap of a-la-carte channels of Rs 12 was illusory since by virtue of the second Twin Condition, only similarly priced channels could have been bundled together as part of the bouquet.
"This condition has been set aside as being arbitrary by the court. It is the second time in three years that two courts have set aside TRAI's regulations & tariff order that impacts the ability of a broadcaster to price and package its channel(s). The setting aside of two stipulations in less than three years by two courts gives credibility to the assertion of the broadcasters that all is not well with the broadcasting industry regulation. This also highlights the uncertainty that the broadcasting sector has witnessed in the last few years," said another senior executive from the industry.
In its ruling, the Bombay HC has upheld NTO 2.0 except for the clause of limitation of 33% discount on bouquet vs a-la-carte prices.
According to Karan Taurani, VP, Elara Capital, there is a high likelihood of the order being contested in the Supreme Court by TRAI as the entire reasoning of getting the NTO 2.0 was to cap discount and move to selective viewing, which the NTO 1.0 did not fulfil.
Taurani, however, mentioned that since the detailed document of the judgement had not come in yet, his viewpoint is based just on media reports.
Speaking on the same lines, a senior distribution executive from a leading TV network shared, "The order has just come. Once we get the order copy, our legal team will analyse it, and then we will decide the future course of action. Without seeing the order copy, it is too early to comment on the judgement and its impact on the broadcasters. We will have to wait for the full details to come out."
A senior analyst too feels that the implementation of NTO 2.0 is unlikely to happen. "It won't get implemented as both broadcasters and TRAI are likely to approach the Supreme Court. It's hard to say if it will have any impact since we are not sure if it's going to be implemented or not.”
Last year on January 1, 2020, TRAI notified certain amendments to the New Tariff Order and Interconnection Regulations for the broadcast sector. IBF felt that these amendments would severely impair broadcasters' ability to compete with other unregulated platforms and adversely affect the viability of the Pay TV industry and therefore challenged the TRAI's NTO 2.0 before the Bombay HC.
The industry body highlighted some critical points in NTO 2.0, including arbitrary reduction of MRP cap from Rs 19 to Rs 12 for channels to be part of a bouquet, imposition of twin conditions on bouquet pricing, restricting incentives only to a-la-carte, and impact of NCF.
