The collective decision has been taken to protect the subscription revenue which is under tremendous pressure due to migration of customers from pay platforms to DD Free Dish, say industry sources

With India's big four TV networks giving the first day of DD Free Dish annual e-auction a miss yesterday, the industry is buzzing with talks that these broadcasters are likely to pull out their general entertainment channels (GECs) from the Prasar Bharati- owned free direct to home (DTH) platform once again. However, the broadcasters are likely to continue offering non-GECs on DD Free Dish, informed sources who are aware of the matter said. The four networks Star, Sony, Viacom18 and Zee have 12 channels on DD Free Dish across GEC, movie, music and regional genres. The channels that will be pulled out from DD Free Dish are Star Utsav, Zee Anmol, Colors Rishtey, and Sony Pal. "Broadcasters have decided to remove their GECs from DD Free Dish. However, they will keep their other channels on the platform. The collective decision has been taken to protect the subscription revenue which is under tremendous pressure due to migration of customers from pay platforms to DD Free Dish," a source close to the development told exchange4media. The source further stated that the broadcasters are worried about the flight of customers from pay distribution platforms to DD Free Dish once the New Tariff Order (NTO) 2.0 is implemented. As things stand today, the broadcasters have pulled out their popular channels from bouquets in order to increase the average revenue per user (ARPU). The NTO 2.0 will come into force from June 1 with the Telecom Regulatory Authority of India (TRAI) expected to come up with a consultation paper on the matter before that. The consultation paper is likely to address the concerns of the broadcasters including the reduction in MRP and easing restrictions on bundling. Multiple sources have said that the four channels collected ad revenue to the tune of Rs 1000 crore annually. "It is a great business model for big broadcasters as they hardly incurred Rs 15-20 crore cost and earned anywhere between Rs 200 and Rs 250 crore revenue annually. However, the popularity of DD Free Dish is detrimental to the subscription revenues in the long run," a senior media executive said. The top boss of a free to air (FTA) network said that the big broadcasters have taken a well-informed decision which will serve them well in the long-term. "Broadcasters had to choose if they wanted ad revenue through reach on DD Free Dish or risk de-growing their subscription revenue. The choice is clear as the broadcasters want to protect their subscription revenue. Unlike ad revenue, which depends on market sentiments, subscription revenue is a steady income stream which shields broadcasters from market uncertainties," the executive stated. The four broadcast networks had last pulled out their GECs from DD Free Dish in March 2019 only to make a comeback in June 2020. The broadcasters had to withdraw channels as these were converted from FTA to Pay. The conversion was done to comply with the NTO regime which disallowed bundling of FTA and Pay channels. According to industry sources, the broadcasters have been under tremendous pressure from cable TV and direct to home (DTH) operators to remove their channels from DD Free Dish since the free DTH platform has grown into an 800-pound gorilla which is rapidly eating into the pay universe of cable and DTH platforms. "The cable and DTH platforms have been complaining to the broadcasters about the impact of re-run GECs on their subscriber base. The Pay TV platforms wanted parity as the broadcasters don't collect any subscription fee from DD Free Dish customers. Either these channels should be Pay or FTA across platforms," a source in the distribution industry had earlier said. The subscriber churn from pay platforms to DD Free Dish has huge implications for Pay TV broadcasters like Star, Zee, Sony and Viacom18. Apart from the price freeze due to NTO 2.0, the decline in pay universe has impacted the subscription revenue of broadcasters. Speaking to analysts during the Q3 earnings call, ZEEL MD & CEO Punit Goenka had stated that the Pay TV market has seen an erosion of 4.6 million households in the last 12-15 months due to customer churn. “Pay TV market has seen an erosion of 4.6 million households which have moved to FTA services. This is largely caused due to the pandemic, and is, therefore the reason for the de-growth seen in subscription," Goenka said while talking about the decline in the company's domestic subscription revenue. Prasar Bharati is conducting the fourth annual e-auction/58th e-auction for vacant MPEG-2 slots on DD Free Dish, which has an estimated reach of 40 million homes in the country. According to industry sources, Shemaroo TV, The Q, Enterr10, Dangal, and Abzy Cool have won slots under Bucket A+. The slot winners in Bucket A includes Manoranjan TV, B4U Kadak, B4U Movies, Abzy Movie, and Movie Plus. The public broadcaster is believed to have mopped up over Rs 75 crore from Bucket A+ category which is reserved for Hindi GECs. It has collected close to Rs 65 crore from Bucket A category which comprises Hindi movie channels. Bucket A+ and Bucket A have reserve price of Rs 15 crore and Rs 12 crore respectively.

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