Carriage fees- Issues


22 Mar 2011
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DD Direct Plus, the direct-to-home (DTH) service of state-run broadcaster Prasar Bharati, has introduced a carriage fee and set a base price of Rs.1.5 crore for an e-auction of slots on its platform.

Carriage, or placement, fee is the sum broadcasters pay cable distribution networks and DTH operators to get slots for their channels.

DD Direct expects to earn at least Rs.525 crore by auctioning slots to 350 channels over the next 18 months, said an official at the ministry of information and broadcasting, declining to be identified as he isn’t authorized to speak to the media.

To begin with, DD Direct expects to rake in at least Rs.150 crore through e-auctions, which will be held late July or early August. The last date for submitting applications for the auction is 5 July, the official said.

Television companies paid an estimated Rs.1,600 crore as placement fees to cable operators and another Rs.70 crore to private DTH service providers such as Dish TV India Ltd and Tata Sky Ltd in 2010, said Jawahar Goel, managing director, Dish TV.

Collective carriage fees charged by DTH operators will touch Rs.500 crore in a few years, he said.

The decision by DD Direct Plus, which has 6 million subscribers, is aimed at financing its expansion, said the ministry official. DD Direct will auction 60-100 slots in the first phase.

DD’s DTH service is free for consumers except for an initial investment of Rs.2,000 for a set-top box. It offers 55 free-to-air channels and competes with private operators in the Rs.4,000 crore industry.

A Prasar Bharati board member, who too declined to be identified, said Rs.1.5 crore will be the “basic carriage fee” for channels.

News channels pay Rs.3.5-4 crore as carriage fees to DTH operators, while general entertainment channels pay around Rs.6 crore. Carriage fees to cable and DTH operators account for 40-50% of a channel’s total cost.

“It’s impossible to work this way (with growing carriage charge), particularly for new channels,” said Markand Adhikari, promoter of Sri Adhikari Brothers Television Network Ltd, which runs a music and comedy channel called Mastiii. “There ought to be a uniform rate card for carriage across DTH and cable platforms, and Trai (Telecom Regulatory Authority of India) should intervene.”

DD Direct’s model, though, seems transparent, he said. “It appears they are introducing this because they have scarcity of space (spectrum). Everyone is on an equal footing in DD system.”

The chief executive of a news channel said it may cost at least Rs.2 crore to be on DD Direct. The executive did not want to be identified as the channel is mulling if it should participate in the auction.

The executive said the broadcaster wanted its news channel on Dish TV but found the rate at Rs.4 crore a year too expensive. Dish TV, a Zee group company, reaches 11 million homes.

DTH carriage fees have increased by about 30% over the past year, according to media analysts. “The overall carriage fee will jump another 10% by the end of the year (post DD’s auction), after which there will be flattish growth with improved capacity (of platforms),” said Mihir Shah, research analyst, media and entertainment, Alchemy Share and Stock Brokers Pvt. Ltd.

I. Venkat, director of Eenadu Television, said DD Direct’s service was not in demand among broadcasters. “DD Direct reaches out to socioeconomic classes C and D audiences, but not everyone wants those audiences,” said Venkat, referring to low-income groups—a population few advertisers seek to reach.

“DTH services by private players will continue to grow as more people shift to digital systems. With increase in audiences, the carriage fee could also increase,” Venkat said.

M. Venkitaraman, chief operating officer of Malayalam television channel Kairali TV, said channels inevitably have to be present on DTH platforms. Kairali TV has been on DD Direct for four years. “It is for the first time DD Direct Plus has fixed a fee and it’ll only enhance competition further,” he said.

According to TAM Media Research, India will have around 38 million digital households by the end of 2011, up from 29 million in the previous year.

Jehil Thakkar, executive director, media and entertainment, KPMG India Pvt. Ltd, said only select channels will explore DD Direct’s platform, given most of them are already on other DTH platforms that have a higher subscriber base. But “DD Direct Plus will attract newer channels, especially those that aren’t part of any bouquet and want a presence of sorts”, said Thakkar.

Several of the 75 channels that were approved in May by the government will be interested in DD Direct’s platform, he added.
but if this possible then ddd+ more rocking 4 every 1 if they add 200+ channels FTA
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