Analysis on TRAI Policy on Digitization of TV

TRAI rules will govern the implementation of Digital Addressable System (DAS) in the four metros of Delhi, Mumbai, Kolkata and Chennai, to be effective from June 30 2012. The key highlights are (a) Basic Service Tier to have 100 channel at INR100 per month; (b) legitimises carriage fees but in a regulated manner; (c) MSOs to ensure capacity to carry 500 channels by the end of this year, this could drive consolidation in our view; (d) revenue share for MSOs fixed at 65% in case of pay channels and 55% in case of FTA channels (positive respite).

Clarification on revenue sharing by TRAI is a positive to DAS implementation and should accelerate the process, assuming broadcasters share in lines of DTH sector at c35%, MSOs blended revenue share is estimated to be c35% and LCO share at 30% in our view.

TRAI has brought carriage fees under regulation and suggested that it cannot be increased for a period of two years. This transparency might be negative for MSOs in our view. However, as DAS implementation
starts with metros which have a fair weight-age in programme ratings, the decline in carriage fees may not be immediate. However, some set off for MSOs may come from broadcasters trying to be part of the Basic Tier pack which will have only 82 channels for private broadcasters. However, TRAI has suggested 5 channels from each genre to be included in Basic Tier, this in our view dilutes the upsides for MSOs