Saturday, May 14, 2016

Broadcasters to Distributors - Changing Interconnect Regulations

In Indian media, TV interconnection regulations between broadcasters anddistributors are under review to keep pace with digitisation. These areunderlined by the need for interconnect to be non-discriminatory and common in framework across distributors. As per the recent TDSAT ruling, reference interconnect offer (RIO) has been made the starting point for deals and the regulator TRAI has a consultation process for fresh comprehensive guidelines. The two parallel processes of TRAI and TDSAT have caused broadcasters and distributors to defer new content deals,impacting near-term subscription revenues of broadcasters. However,long-term increased transparency will be a positiv.

TDSAT ruling compelled TRAI’s comprehensive review
The recent Telecom Disputes Settlement Tribunal (TDSAT) ruling (in case of NSTPL vs Media Pro) has made it mandatory for RIO to be the starting point for negotiations from 1 April 2016. In a move to increase transparency, TDSAT has also asked broadcasters to clearly state all bulk discount schemes on offer in their RIO and have asked broadcasters to issue new RIOs by 1 May 2016. TDSAT has also asked TRAI to issue a comprehensive code for thebroadcasting sector, and TRAI has come out with a consultation paper on key issues surrounding interconnect agreements. Broadcasters have also made available new RIOs, which clearly specify the basis for discounts which could go up to as much as 70-80%. In the wake of these developments, stakeholders have put the signing of new interconnect agreements including the ones for phase 3 digitisation on hold,which is impacting near-term subscription revenues of leading broadcasters.

Beyond digitisation, interconnect agreements hold the key to subscriber billing tariffs and ARPU.The key reason for delayed ARPU uptick in digitisation phase 1 and 2 was delays in finalisation of interconnect agreements between MSOs (multi-service operators) and broadcasters and between MSOs and LCOs (local cable operators).Increased transparency in interconnect agreements in medium to long term will add upsides to Zee Entertainment’s subscription revenue forecasts.

No comments: