TRAI proposal may squeeze TV ad revenue

A consultation paper on the regulation of advertisements in TV channels released by the Telecom Regulatory of India (TRAI) poses a threat to revenues of TV channels.

Currently, there is a limit of 12 minutes per hour for advertising, including two minutes for programme promotion. According to the new guidelines, no free-to-air channel shall carry advertisements exceeding 12 minutes and for pay channels, the limit shall be six minutes. The prescribed limits shall be enforced on a clock-hour basis as against being averaged for 24 hours. Also, the 12-minutes of advertisement are not to be aired in more than four sessions in one hour. That will result in continuous ad-free broadcast for at least 12 minutes. With the new guildlines, no more than three ad breaks during a movie, with a minimum 30 minutes between ad breaks will be permitted. During live sporting events, advertisements can only be carried during interruptions in the sporting action. TRAI has also put up a proposal to ban on part-screen & drop-down advertising, which means only full-screen ads are permitted. In addition to that, TRAI has proposed that audio level of the advertisement should not be higher than the audio level of the programme. TRAI also proposed that news and current affairs channels, cannot run more than two scrolls at the bottom of the screen carrying non-commercial content; these scrolls should not occupy over 10% of the screen space. The regulator has asked the industry to comment on the proposal by March 27. Industry watchers say that the IBF has already taken up the issue with the government. TRAI plans to implement the proposal on the completion of the digitisation process, by December 2014. The industry is likely to oppose any move that will be imposed before digitisation is complete and broadcasters are compensated with subscription revenues. Industry body argues that subscription revenues are currently negligible, and will grow in stature only over the next three years when phased digitalisation is complete. So they want TRAI to treat the slashing of ad volumes as a sunset clause that will coincide with complete digitalisation. Any restriction before this happens will be opposed.