By Karan Taurani@Elara Caps

As per media reports, three large broadcasters (Sony, Zee, Star) have disconnected their services from few MSO networks due to a quarrel over NTO 3.0.

Ninety percent of operators, both DTH and MSOs, have signed up under NTO 3; the balance of operators have been holding back, despite best efforts to get them on board.

DTH (direct-to-home) players, who, unlike the cable industry, don’t have local cable operators, have decided to take some hit on other costs, and pass on only a 5-9 percent increase to subscribers.

Our View

India has 160-170 million TV households (125mn pay TV) of which 40 million households (larger MSOs) will not get channels from key broadcasters like Zee, Sony and Star as there is a fight with the MSO’s over price hikes.

Within this, the larger national MSO’s (Hathway GTPL, NXT, KCCL, Den, Asianet, Fastway, etc) have not agreed to price hikes whereas the smaller MSOs (40-50mn households) and DTH (70mn) have agreed to the pice hike . These three broadcasters generally contribute almost 40-45 percent of the total TV viewership share in India.

The reason for this blackout is that these broadcasters are demanding a price hike of approximately 25-30 percent on the packages, which the MSO’s haven’t agreed upon as they believe their customer base is more price sensitive than the DTH base.

We believe this interim blackout will have a significant negative impact on ad revenue for the above broadcasters, apart from a hit on the subscription revenue (could be down by 25-30 percent), if this issue persists for more than a few days.

However, the negative impact will be far higher for the MSOs who have to go through this blackout for their customer base, as these broadcasters have a substantial viewership share on TV.

We believe this is a big dampener for TV broadcasting growth rates, which are already struggling due to constant threat from consumption shift towards digital.

Eventually, some of these MSO customers may migrate to DTH if the uncertainty or blackout persists for longer than expected.

SUNTV, TV18 and other broadcasters have not demanded a steep price hike as of now, but may demand a hike in the range of 10-15 percent, thus they may remain on all MSOs.

Ad revenue for broadcasters is already under pressure due to new age and commerce companies cutting ad spends; TV advertising revenue recovered to 95 percent of pre-Covid in FY22 and is estimated to move to 90 percent recovery rate vs pre-Covid in FY23 due to a relatively muted festive season.

NTO 3.0 was to be implemented in the month of February ’23 and most broadcasters wanted to go for a price hike, as they had not taken a price hike since the last three years due to uncertainty over NTO implementation.

(The views expressed are those of the author. Indianbroadcastingworld.com need not subscribe to the views.)