Zee Says TRAI’s New Tariff Regime Won’t Affect Its Subscription Revenue
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Zee Says TRAI’s New Tariff Regime Won’t Affect Its Subscription Revenue

Zee Entertainment Enterprises Ltd. said the regulator’s new tariff regime that allows users to create their own bouquets of channels won’t hurt the subscription revenue of India’s largest broadcaster.

Zee bundled the channels based on the viewing pattern of consumers into its family pack and priced it at Rs 45, Punit Misra, chief executive officer-domestic broadcasting business at the company, told BloombergQuint in an interview. The base bouquet, he said, is available at a discount to the a-la-carte channels. “We have a total of 68 bouquets. For instance, for languages there’s a different bouquet.”

CLSA said the channel bouquets will still prevail. An analysis of pricing of top broadcasters showed that they offer a 20-65 percent discount, the brokerage said in a recent report.

“The amount of discounting is the choice of the broadcaster and that is something which is in sync with the consumer-led pricing mechanism,” Misra said “It’s an open market operation. You have the power of choice and you have the power of discount.”

The Telecom Regulatory Authority of India recommended a 15 percent cap on the discount on the bouquet pricing by broadcasters. This, however, wasn’t allowed by the Madras High Court. The regulator now has moved the Supreme Court seeking a clarification.

The new tariff order will be effective Dec. 29. Prior to its rollout, broadcasters bundled paid and free-to-air channels into bouquets. The a-la-carte channels were priced higher, forcing consumers to opt for bouquets. The new order does away with the bundling and caps the a-la-carte prices at Rs 19 if the broadcaster wants to include them in a bouquet. Also, consumers can select and pay for the channels they want to watch at the maximum retail price fixed by the broadcaster.

CLSA said the new pricing suggests that subscribers will have to pay Rs 315 a month—Rs 185 for content and Rs 130 a month for network capacity charge—for the base pack of top four broadcasters. With Rs 130 as the fixed price, consumers will have to decide if they want to opt for a-la-carte channels or bouquets, the brokerage said.

Zee also aims to maintain the guidance of subscription revenue for the group. “Consumers have already rewarded us by giving us the viewership share we have,” Misra said, adding the company’s viewership share rose to 20 percent from 15.9 percent two years ago. “We will deliver on that growth.”

Highlights Of TRAI’s Tariff Order

  • The consumers will be provided a-la-carte rates for every channel they want to watch. It also caps the a-la-carte prices at Rs 19 a month if these channels are to be part of any bouquet.
  • Under the new regime, broadcasters will declare MRPs for pay channels and earn based on the channels subscribed by end-users.
  • Distributors can charge up to Rs 130 a month as capacity fee for 100 standard definition free-to-air channels with an option of additional Rs 20 for every 25 extra standard definition channels.
  • Distributors will also get 20-35 percent of a subscriber’s content outgo as distribution fee.
  • The new regulations restrict inclusion of pay and free-to-air channels in the same bouquet and any channel priced over Rs 19 in a bouquet.

Watch the full interaction with the management here:

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