Ad threat faces Indian broadcasters

22 March 2012

NEW DELHI: Pay-TV broadcasters could soon come under pressure in India, as the country's authorities threaten to dramatically reduce the amount of time they can dedicate to advertising.

Under proposed reforms under consideration by the Telecom Regulatory Authority of India, pay-TV channels would only be able to show six minutes of ads per hour, down from the current level of 12 minutes.

"There will be a direct impact on our revenues as the advertising time is almost reduced to half," Kevin Vaz, president, advertising sales at Star India, told the Business Standard.

Data from KPMG, the business services firm, revealed that there are some 163 stations which could be impacted by this change. These operators take a majority of the Rs11,600 spent on television advertising in India each year.

While subscription revenues are also worth Rs21,300 crore annually, inefficiencies in the current system mean advertising is often considered to be a more reliable source of income.

As such, despite the fact Media Partners Asia, the consultancy, has reported that the share of revenues attributable to advertising fell from 76% in 2007 to 72% in 2011, concerns remain widespread.

"Channels depend on advertising. How can you slash it by half?" said Rohit Gupta, president of Multi Screen Media, which runs channels like Sony Entertainment Television, SET Max and SAB.

Anita Nayyar, chief executive officer, MPG South Asia, the media planning and buying group owned by Havas, also warned the consequences of this move were likely to be negative for clients.

"It is only at the discussion stage. We are hoping there is no adverse ruling at the end of it," she said.

Data sourced from Business Standard; additional content by Warc staff