12-minute ad rule wrong step at wrong time

Annurag Batra, the well-regarded media analyst and publisher, says the government’s move to limit advertisements on news channels to 12 minutes per hour – which has been challenged by broadcasters — is patently wrong and comes at the wrong time, too. Broadcasters are 18-24 months away from getting the benefits of lower carriage costs made possible by digitisation, he told Ravi M Khanna in an interview. Excerpts:

How do you see the 12-minute ad ceiling?
This should be left to the free market. The rule has been there for 19 years, but wasn’t implemented because the government knew it wasn’t prudent. The timing of this is all wrong. My fundamental contention is that let the market forces decide whether it should be 12 or 30 minutes because the viewer has a remote control in hand. Secondly, why are they including the two minute promo time in those 12 minutes? Promotion is also content.

Thirdly, who says ads are not content? They are of value to the viewer, there is an offer. Fourthly, to say that just because there is a rule and we should implement is wrong. The government has no business regulating like this. The argument that TV channels have started getting subscription revenue is like counting chickens. Revenues will come in 18 to 24 months from now. So this is all wrong.

Is it possible that even when channels start getting revenues and making more money, they may not spend so much on content?
Let the viewer decide that, who are we? Consumers have a choice because they are paying for the channels. So if they don’t like one, they will watch another. Some channels will use this as a competitive advantage to show lesser ads and viewers can choose these channels. And then there will be ad-free channels too. So this talk of safeguarding the consumer is sheer bunkum. I mean, in an election year, does the government really want to stress news channels? I think in an era of abundance, the government should be an enabler of the media business, should seek a stronger media so that it’s able to fulfill its role.

So will we see more channel spend on content?
On an average, Indian news channels spend 8-10% of their budget on content and over 40% on carriage fee -- in some cases even 50%. So clearly, yes, news channels are not a profitable business model and yes, the carriage fee should be reduced. When that happens, the subscription revenue will increase and consequently, the business model will become feasible, channels will become profitable and definitely more money will go into content creation.

How do you see the future of Indian Media?
We are at a crossroads. There are five seismic things happening. First, media platforms are looking to differentiate, and second, the presumptive credibility of media no longer exists. There was a time when media was like the Bible, the gospel. The media knows this and over the last 2-3 years it has been trying a lot to get that back, and I would say it has been successful to a large extent. The third is digitisation, which ensures advertising revenues will be supplemented by subscription revenues.

The fourth is format -- paper, web or TV. Increasingly, consumers are becoming format neutral. So the notion of cross-media ownership is wrong. The fifth is that while all this is happening, the web will become very big, it will become the television in your hand. And special interest media like the domain experts and blogs will become even more powerful. So here’s the perspective: the big players will become bigger on the one hand, and on the other, the smaller, standalone, niche, special interest players will become very important too because they will offer a deep dive into issues.

Ravi M Khanna is the former South Asia bureau chief of Voice of America