It goes against everything TRAI regulation originally intended to do. Make the arena a level playing field, so consumers can choose a distributor that provides the better service and choose the channels they need. For example, lets just say that If I prefer Tata Sky but I watch Sun TV, what are my options? Pay for it in Tata Sky and keep better service or settle for the relatively poor service and discounted price. Its not the end of the world,yes, but its far from ideal.
Also the smaller players will be hard done by it, they have no top channels to subsidize,see?
And before someone asks why shouldn't other distributors give the same discounts. The answer is simple, it makes little sense for them. Sun direct will indirectly profit from Sun Tv gaining viewership rating but another operator like Tata sky won't.