In the wake of the Supreme Court ruling on 6 December 6 that TDSAT (Telecom Dispute Settlement and Appellate Tribunal) cannot admit petitions challenging rules laid down by TRAI (Telecom Regulatory Authority of India), the Tribunal has dismissed broadcasters’ appeal seeking exemption from the ad cap.
Underlining that channels are required to follow the advertising code of the Cable Television Networks Rule (CTNR) 1994, the TRAI said in March 2013 that they should follow Section 11 of the advertising code. This meant that no channel can carry ads of over 12 minutes duration in an hour slot, including two minutes of on-air promotions of the channel’s shows (10+2). The 10+2 ad cap for channels was to come in effect from 1 October 2013; broadcasters including Star India, Viacom18 and ZEEL complied. However, News Broadcasters Association (NBA) and other broadcasters including 9XM, B4U and E24 had contested the ruling.
Following this, the TDSAT had asked TRAI not to implement the 10+2 ad cap until 11 November. The Tribunal began hearing the case between broadcasters and TRAI from 12 November. Channels claimed that TRAI has no authority to limit the number or duration of advertisements on their channels and that enforcing the ruling it would spell disaster for the (broadcasters’) business.
While the dismissal implies that the TRAI’s 12 minutes of advertising per clock hour ruling comes into effect immediately, broadcasters opposed to the ad cap are not ruling out another appeal.
News broadcasters and other channels have been quiet about the decision. Ashok Mansukhani, CEO, MCCS, and VP, NBA, said, “No decision has been taken yet. We are awaiting the judgement copy,” when asked about the association’s next step. NBA is currently contemplating its next move.
‘Expect muted hike in ad rates’
The ad cap also meant that the broadcasters increased their ad rates - some earlier than others in preparation for this eventuality.
Ashish Bhasin, chairman India and CEO, South East Asia, Aegis Media, noted, “Ever since the 10+2 ad cap issue was known, some of the broadcasters did increase their rates because the inventory available to them was lesser than before, since they voluntarily implemented the same in varying degrees. The percentage of increase varied and while the expectations were a lot with the average range was between zero and 15 per cent. However, it varied significantly from broadcaster to broadcaster and was decided by the market forces and the strength of the respective channels. In all rate increases, the size of the client’s business, payment track record and various other factors come into play, so it is hard to quantify the same.”
While the broadcasters are tight-lipped about how much of an increase they have been able to effect, Bhasin said, "I see that going forward if the 10+2 ad cap is strictly implemented, there will be some rate increases. The expectations that were there earlier of significant rate increases will not come true because the overall economy is slow and advertisers do not seem to be in the mood for paying substantially more. The advertisers’ business itself is under pressure and hence, given all these factors, in my view there will be rate increases but they will be relatively muted compared to what was earlier expected.”