Why Sports Broadcasting Is Becoming A Lose-Lose Game

Sports broadcasters, losing audiences and revenue, will have to lower their bids for broadcasting rights, in order to remain viable.

It surprised no one. Ever since the Supreme Court ruled, in September 2017, that Doordarshan could not share its free, mandatory-sharing feed with cable and satellite operators, it was widely expected that sooner or later the government would attempt to find a way around. Now, true to the script, the I&B Ministry proposes an amendment to the 10-year old Sports Broadcasting Signals Act.

Rewinding…

In October 2005 the Union Cabinet made it mandatory for broadcasting rights holders of major sporting events to share their signal with Doordarshan (DD). The argument was that as a large number of people do not have and cannot afford access to cable and satellite television, and so cannot watch “sporting events of national importance”, sports broadcasters must provide their signal to DD, to reach those audiences. Needless to say, “sporting events of national importance” was largely a euphemism for cricket matches.

In 2007 Nimbus (owner of Neo Sports) challenged the directive in court. The government immediately promulgated an ordinance and then, with remarkable speed, enacted a law. The court case dragged on, and in 2013 Star and ESPN impleaded themselves in it.

Meanwhile DD freely misused its privilege. Given the feed to carry only on its terrestrial and free DTH networks, it aired the matches on its cable and satellite channels, too. All cable and DTH operators must mandatorily carry and deliver two DD channels at no cost to DD or the subscriber. They were now getting the content for free and did not have to subscribe to channels of the host broadcaster. So here’s what was happening: a broadcaster who had put hundreds of millions of dollars on the table to win the broadcasting rights for an event was providing the content free to DD, which was providing it free to the distribution channels, and so to viewers.

The implication for the broadcasting rights holder is, of course, loss of viewership and consequently financial loss.

The broadcasters were arguing not against signal sharing, but against DD’s malpractice. In 2015 the Delhi High Court ruled in their favour and the government went to the Supreme Court, which in Sept 2017 upheld the High Court ruling.

So the issue at stake now is not the larger question of whether and why the rights holder should give their feed, but of DD running that on its cable and satellite networks. It is pertinent, though, to step back and look it the subject in its entirety.

Why, and why the haste?

Why is the government is so anxious to make this possible, whatever it takes? The speculation in the industry is that it is under pressure from the cable lobby. It is the cable trade that stands to benefit most from the content being available free on DD, and they have historically had more clout with the government of the day than the high-profile broadcasting industry has.

The clearest evidence of that clout is their successfully stalling digitization for years, though it was in the interests of both consumers and broadcasters. One former I&B Minister candidly told me, in an informal one-to-one chat, that the government did not have the political will to confront the cable trade. On another occasion a former Chairman of the TRAI said, after a meeting with a delegation of news broadcasters, “Tomorrow we have a meeting on the same subject with cable operators. This room will be packed, there will be standing room only, and everyone will be shouting. They make themselves heard.”

As this is clearly a matter of regulation, though, why is the regulator not involved in it? The system requires the government to make a reference to the TRAI, which then goes through a well-established process and gives direction. The trouble with the TRAI is that as an independent, constitutional authority it does not report to the government; and is thorough in its process, homework, and paperwork (even if you don’t always agree with its opinions and conclusions). This matter was referred to them, but in March 2014 they wrote back to the Ministry that, “TRAI has to follow its established consultative process before giving its recommendations,” and asked for clarifications and more information. Solution: bypass the regulator.

The rates broadcasters charge cable operators for pay channels have to be filed with the TRAI, but cable operators are free to charge consumers what they will, so they can raise their monthly subscription rates opportunistically. What came in the way of this gift to the cable trade was the existing legislation, as it categorically permits DD to transmit the shared signal only on its terrestrial and free DTH networks. Solution: amend the legislation.

This move is consistent with the government’s moves to make DD’s free DTH service Freedish less attractive. About a year ago the Ministry abruptly called off the auction of slots on the platform because, they said, private sector broadcasters paid only Rs 6-8 crore for a slot but earned hundreds of crore in advertising. And, they said, because all that content was available to them Freedish subscribers were not watching DD channels. What they are still getting is to watch cricket for free. Make that free content available on cable and commercial DTH, and there goes the last reason to have Freedish.

The intention of starting the process now is clearly to enable the proposed amendment to be passed into law well in time for the trade to exploit the 2019 Cricket World Cup, starting in May. The other big event scheduled around the same time is, of course, the Lok Sabha election. What is the connection between the World Cup and the elections, you ask? Join the dots and see the picture.

Substantive issues

The question of motive and timing is, admittedly, a matter largely of speculation and imputation. Keep that aside, though, and several substantive issues still remain to be addressed and answered.

No criteria or guidelines: There is no known basis to the list of “sporting events of national importance”. There are no criteria or guidelines: it is simply what the Ministry says it is, with the proviso that once an event is notified it will remain on the list for four years.

What about those who don’t have a TV? Accept for a moment that this is a laudable effort to serve those who cannot afford cable and satellite TV. Is the government’s obligation limited to those who do have access to a TV? What about those who cannot afford one? Don’t they deserve to watch sporting events of national importance?

Why a clean feed? Even without the proposed amendment the Act as it stands requires the rights holder to give DD what is called a clean feed, i.e., without graphics, commentary, and – most important – advertising. This is to enable DD to sell advertising time and earn revenue.

If you are the host broadcaster, who has paid for this content, you have two sources of revenue: advertising and subscription. Let’s deal with advertising first. The content you paid for now reaches viewers of your network plus viewers of DD’s network, but the advertising you carry gets only to your viewers, and that is what you get paid for. DD earns from the advertising it carries to its audiences on the back of the content it got free from you. This is revenue that should rightfully have been yours. If signal sharing is only in the public interest, to enable a larger number of people to watch the event, surely the public interest does not require that DD should earn from it, at the cost of the rights holder.

Why cable and satellite? The amendment now proposed seeks to legitimize what has been DD’s rampant malpractice for years. The inclusion of cable and commercial DTH platforms is against all logic. If the purpose of sharing the signal is to reach people who cannot afford cable and DTH, how does it even begin to make sense that DD be allowed to transmit its feed on cable and DTH? The loss of viewership is not notional or hypothetical: BARC data show that viewership on DD National or DD Sports can be as much as, and sometimes higher than, that on the channel of the rights holder.

The implication is clear. Cable and DTH operators get the event telecast for free from DD so they don’t have to buy it from the rights holder; and on the other hand are free to charge customers for it. The rights holder loses; DD doesn’t gain; and the customer pays for content that the cable operator has acquired for free. There is only one winner in this game, and it is not the customer.

Why the ticker? If you have been watching cricket on TV, other than on DD, after April 2018, you have seen the ticker at the bottom of the screen saying that what you are watching is available free on DD and on Freedish. This has to be the single most ridiculous requirement in this whole sorry matter. Not only are the rights holders required to give the content free to DD, they are also required to drive audiences away from themselves to DD. In what sense, by what criteria, can that be considered fair and reasonable?

If you starve the cow you won’t get milk 

The concept of “sporting events of national importance” can be argued for, and a case made for sharing the feed to reach a wider audience. The broadcasters have  sensibly stayed away from that argument, even if they – understandably – don’t like it. The EU and several countries do have regulations in that regard, but they have specified criteria to determine whether an event is covered or is exempt from it. In India as the subject of mandatory sharing has moved over the years from executive order to ordnance to law it has remained entirely without a basis, and even the proposed amendment to the act does not address that lacuna.

Even if you accept something in principle, the execution of it must be on a fair, reasonable, and equitable basis. The only way that can be so in the present instance is if the signal shared is not the clean feed but the complete feed as transmitted by the host broadcaster, which includes the advertising; if DD is limited to transmitting it only on its terrestrial and Freedish networks; and if that ridiculous ticker is done away with.

If the government continues its extortionate ways here is what will happen. Sports broadcasters, losing audiences and revenue, will have to lower their bids for broadcasting rights, in order to remain viable. Sports federations, for whom broadcasting rights are the major source of revenue, will have to make do with less, with direct consequences for the sports each of them represents. In this lose-lose game, the ultimate losers will be the sport and the viewing public whom this policy ought to serve. – Business World