TRAI’s New Tariff Order (NTO 3.0), which has been the bone of contention between broadcasters and Cable TV industry ever since its announcement, may have allowed media companies to hike channel prices but, in the hindsight, it seems they are losing subscribers ever since it was implemented in February this year.

The execution of the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Third Amendment) Order or the NTO 3.0 allowed broadcasters to hike the prices of their linear TV channels by 10-15 %.

The industry has a mixed response to share on the impact of NTO 3.0, with some saying it has been positive and others saying it has shrunk the number of subscribers and has no good impact. However, the financial statements of various broadcasters paint a different picture, showing that the subscription revenues are up in Q1 and Q2 of FY24 compared to the same periods last fiscal.

In the recently released financial result of TV18, the company reported a 12 % jump in subscription revenue in the second quarter of FY24 compared to the same quarter previous year. TV18 reported subscription revenue of Rs 506 crore in Q2 FY24.

Similarly, ZEEL witnessed a growth of 18% in its subscription revenue in Q1 FY24 compared to the same period last fiscal.

A senior industry source said that NTO 3.0 led to price hike per channel which has definitely led to an increase in subscription revenues of broadcasters and they are expected to further go up in the second half of the current fiscal.

“There was an increase of 30-35% in subscription revenues of broadcasters after NTO 2.0. We expect a 7-8% increase in these revenues in this year because of NTO 3.0. It is positive for broadcasters but challenging for customers who are paying over 30% since the implementation of the order,” the source said on the condition of anonymity.

According to Elara Capital’s Karan Taurani, the reason behind the hike in these subscription revenues is the increased channel prices post the implementation of NTO 3.0.

Talking about ZEEL’s Q1 FY24 result, Taurani said, “The subscription revenue for the company was up by 18 % from Rs 771.7 crore to Rs 907.49 crore as it was driven by the pick-up in subscription revenue post NTO 3.0 and ZEE5.”

However, some industry sources shared that NTO 3.0 was just a long overdue correction measure and not price increase which is not causing any benefit to broadcasters who had their TV channel prices frozen for five years before the new order came into force.

Experts also believe that a 10-15 % increase in prices of channels has also reduced the subscriber base by the same number which evens out the situation so the question of positive impact on subscription revenue does not arise.

A senior official from a broadcast company told exchange4media that NTO 3.0 will only have a negative impact on subscription revenues of broadcasters for linear TV because of the growth of OTT platforms and loss of subscriber base.

“Impact of NTO 3.0 on broadcasters is that their subscription revenues have gone down because subscribers became very price sensitive. The prices have increased and people shifted from TV to OTT or they have cut the cord. There is no positive impact,” said the official who did not wish to be named.

Explaining further, he said that if prices of channels are increased by 10%, the subscriber base is also going down by 10%.

“Now what has happened is that subscribers have gone down on a higher ARPU market. There was free streaming of IPL and now ICC World Cup is for free on mobile streaming. This is like telling subscribers not to use their TV services in a way.

According to sources, within the last 10 months, the paid TV subscriber number has gone down by 6-7 million, from 107 million to 101 million.

Experts expect that by March 2024, it will go further down to 98 million.

“So, if broadcasters have increased the price by a certain amount, they have also lost a similar number of subscribers. It is simple maths. There is no positive impact of this NTO 3.0 on broadcasters,” said the official.

The amended new tariff order (NTO 3.0) was issued by TRAI in November last year after which the broadcasters announced the price hike. It came into effect on February 1 this year.

The NTO 3.0 reinstated the Rs 19 MRP cap for TV channel inclusion in a bouquet and also allowed broadcasters to offer a maximum discount of 45% when pricing its bouquet of pay channels over the sum of the MRPs of all pay channels in that bouquet. In the revised pricing, broadcasters had increased the price of some bouquets by 10-15%.

This order brought cable industry and broadcasters at loggerheads earlier this year with the former terming the increase in prices as “steep” and “unreasonable” while the latter had stopped providing feed to cable operators.

However, the standoff was over after the cable operators failed to get an interim relief through the legal route and agreed to sign the fresh RIOs (reference interconnection offer) following which the channels were restored.

Recently TRAI had issued a consultation paper to review the Regulatory Framework for Broadcasting and Cable services seeking comments from stakeholders by October 25.