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Indian pay-TV industry hits back at regulator’s ad cap proposal

A proposal to halve the duration of advertising breaks on India's pay-TV channels by the country's regulator has been received with incredulity by broadcasters.

In a discussion paper issued last week, the Telecommunication Regulatory Authority of India (TRAI) said a six minute cap per hour should be imposed on advertising on subscription TV channels to improve the viewer experience.

India's 163 pay-TV channels currently rely more on advertising revenue than they do on subscription fees, with some putting the ratio at 70:30. TRAI argues, however, that with the advent of mandatory cable digitisation across the country beginning this year, this imbalance will change.

Nonetheless, broadcast executives have told reporters that with ad revenues slashed by half, they will struggle. Media planners are also concerned the proposal, if adopted, would lead to an insupportable hike in the advertising rates charged by broadcasters.

Ashish Pherwani, associate director, Ernst & Young, told Business Standard: "The bulk of the ad revenues in the television industry come from advertising on pay channels as they have an expansive viewer base. If the proposal goes through, it would have a significant impact on the quality of programming, which is what the regulator is trying to address in the first place. The cost of producing some of the most watched shows is as high as INR 1.5 crore per episode. Broadcasters would not have much left to invest in content."

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