DTH players to face profit issues due to TRAI guidelines

TRAI’s latest tariff and interconnection regulations will need 6-8 more months for effective implementation due to challenges in revenue sharing between multiple system operators (MSOs) and local cable operators (LCOs).

Long-term packs already sold by direct-to-home (DTH) players and re-pricing of channel bouquets will also impact the business.

The tariff order is likely to de-risk the business model of MSOs and LCOs as their revenue stream will contain fixed network capacity charge (NCC) from subscribers and content commission from broadcasters (BC), India Ratings and Research (Ind-Ra) said.

DTH players may face profitability issues in the next 6-12 months, since they have already sold long-term plans till end of 2018 and DTH companies will not be allowed to withdraw or reprice a plan that’s already in use plan.

Post TRAI’s removal of the 15 percent discount cap on bouquet price versus a la carte channel pricing, broadcasters have started offering bouquet of channels, at 20-60 percent discount to the a-la-carte channel pricing, to avoid any hike in final consumer price. However, despite similar costs, consumers will have access to fewer channels compared to the previous tariff regime.

Broadcasters’ business model will change from B2B (selling content to distributors) to B2C (selling content to consumers) as broadcasters will now market their channel bouquet to end customers rather than rely on MSOs.

Broadcasters with strong set of anchor channels will benefit, as they will be able to create a comprehensive bundled offering and generate customer pull, India Ratings and Research said on Tuesday.