Advertising should not be regulated: Broadcasters

By issuing notification on limiting the duration of TV advertisements to 12 minutes per clock hour, the Telecom Regulatory Authority of India (TRAI) has once again proved that its actions do more damage than benefit. The new rules issues under the title ‘Standards of Quality of Service (Duration of Advertisements in Television Channels) Regulations, 2012. As per the regulations, advertisements on TV channels will be not more than 12 minutes per clock hour. The rules also state that TV channels have to play full advertisements and no drop down or part ads shall be allowed. TRAI has said that in case of movies ad breaks should be after every 30 minutes and incase of general programmes, after every 15 minutes. In case of live sports broadcast, ads can only be placed during sports break and as such minimum time between ads is not applicable. The audio level of ads cannot be higher than that of the rest of the programmes being broadcast. 

 

The announcement has been severely criticized by industry bodies as trying to interfere in their affairs. The fight is likely to move to court as there is little chance that TRAI will see their point of view. Advertising after all is their main revenue generator and bread &  butter as subscription revenues do not generate enough revenue. Also if newspaper, web and FM radio channels have no limit and advertising is not regulated why should TV ads be regulated. TRAI says this is in consumer’s interest. But this is a flawed argument as channels themselves are aware what is best for the consumers and for them. If they play too much of advertisement, consumers  know to change channels and secondly many a channels like Zee and Star have voluntarily cut down on advertising time in their best interest. They already realize that too much of advertising and bombarding the viewers is detrimental to their viewership base and may result in long-term revenue loss.

 

Such restrictions are likely to adversely impact the broadcasting industry’s viability and finances severely. It may result anywhere between 15 to 40 per cent of revenue loss. This is a grim picture which may sound the death knell of quite a few TV channels resulting lower competition and less channels for the consumers to watch. The trickledown effect can be enormous as it will affect the quality of new programmes, viability of movies (as satellite rights form a major chunk of revenues for them) and even viability of sports like cricket, the rights of which are bought at huge premiums which in turn is recovered from advertisers.  

So what is the way out?

 

This should be best left to the market forces. It should be left to the channels to decide how much of advertising to carry and in what manner. If they show too many ads, viewers would desert them for some other channel which has less ads. If TRAI tries to set the limit on  advertising it will hit the basic commercial viability of TV channels. New channels will then think many times over before entering the scene. So TRAI would do well to leave this terrain to the channels and viewers. But TRAI can help with distribution, whose mounting costs are a genuine entry barrier for television channels.