Thursday, 10 October 2013

Ad cap issue becomes a hornet's nest

After the IBF announcement of its decision that all its members would shift to 10+2 ad cap as stipulated by TRAI in its quality of service regulations for addressable systems the Indian Society of Advertisers (ISA) has sent a formal notice to the Indian Broadcasting Foundation (IBF) on the ad cap issue. A notice sent by ISA Chairman Hemant Bakshi states: “Members of ISA have brought to the notice of ISA that they have received letters from some members of IBF about their proposal to impose an ad cap self-regulation and, thereby, ration inventory available to the members of ISA on the channels of these IBF members.”
The notice further states that the ISA has taken a very serious view of this issue, “which is wholly uncalled for and is brought up by some IBF members with ulterior motives to make undue gains”.

In the case of News Broadcasters Association and others Vs. TRAI, TDSAT had, vide its order dated August 30, 2013, directed that till further orders, TRAI shall not take any coercive measures against the appellants or its members to make them abide by the impugned ad cap regulations and further directed the matter to be listed on November 11, 2013.
Also in a very recent case four music channels namely Mtunes, Masti, B4U and 9X networks have approached TDSAT against the ad cap and the matter will be heard on 21 October. So they need not follow the ad cap till then.
It is believed that some more broadcasters including Sun TV are planning to approach TDSAT to get a temporary relief since TDSAT appears to have a liberal approach in allowing broadcasters to violate the 10+2 ad cap regulation for some more time. Since this ad cap is already a Cable TV Rule notified in 2005, TDSAT will not be able to change that as the amendment if any has to go through the parliamentary procedure. However, broadcasters may gain some more time to abide by it.
The ISA notice adds, “Advertising on network channels is a part of monthly brand media plans and the act of some of your members in reneging the subsisting contracts will lead to under-deliveries of media plans, causing business losses and hardship to our members. It is wholly wrongful and arbitrary on the part of some of your members to take unilateral action in reneging on subsisting contracts on account of purported self advertising cap.”
“These members of IBF are looking to unilaterally pass the entire cost and burden of self-imposed ad cap onto the advertisers, without any discussion and agreement. We find this approach of such members of IBF incorrect and unjustified,” the notice further states.
The notice also points out that during the earlier issue of audience measurement reporting, IBF had agreed that unilateral decisions will not be taken by them and any concern that its members may have will be resolved through dialogue and would be mutually agreed. “The present conduct of some IBF members is contrary to what had been agreed by them in the recent past,” it adds.
Clarifying ISA's position on this, the notice states, “We will advise our members to abide by the law and the judicial pronouncements. Any unilateral decision that some of your members take to renege on the existing contracts under the so called self-regulation while the matter is sub judice would virtually amount to showing contempt of TDSAT's order.”
TRAI in the mean time has decided to stick by its decision to implement the regulation from October 1. It has been revealed by a TRAI official in an interview with the media that the regulator will take legal recourse against any violation of the ad cap regulation starting 1 October 2013. According to the official, “most of the channels have agreed to comply by the regulation. These regulations are in place since 2005. They have been flouted all these years. It is now that TRAI has put this segment under the umbrella of quality of service. The ad limits are not different. They have been there for a long period of time; hence, there is no question of any such excuse.”
As far as the IBF members are concerned, mainline GECs are still divided over the 10+2 ad cap implementation from October. It is learnt from highly placed industry sources that Star Plus, Zee TV and Colors, and the respective networks they belong to, have planned to go ahead with the mandated ad cap. On the other hand, Sony and its network, MSM Group, may oppose the ad cap.
Although the implementation of ad cap would necessarily imply that there would be increase in the cost of inventory of the channels, it is learnt that the advertisers and marketers are not buying that logic. India's festive season is round the corner and it is time for major marketers to advertise heavily, but low sales and gloomy economic scenario is not allowing them to cater to increase in the ad rates.


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