Star has chosen to make RIO or Reference Interconnect Offer the trading currency for all deals with operators. Currently, this structure is focused on the cable business in Phase 1 and Phase 2 markets.
In a significant development, broadcast network Star India (fully owned subsidiary of 21st Century Fox) announced the launch of an industry-first tariff structure with cable platforms, one based on uniform pricing, as opposed to bilaterally negotiated deals.
The network claims this is a development that "will empower the viewer with greater choice, will usher in a new era of transparency in dealing with the distribution fraternity and will give a boost to the entire digitsation eco-system."
"This initiative will result in openness in pricing for consumers and empower both, the viewers and platforms," the network said in a press statement, issued yesterday.
The statement goes on to inform that the "revised Reference Interconnect Offer (RIO) will be in force for one year with digital platforms in Phase 1 and Phase 2 markets. The channels are all offered on a basis that allows the platform payouts to vary as per their choice of content and incentives. The incentive would be based on the number of Star channels carried, the number of viewers and the ease of access to these channels. Platforms that still opt out of the revised RIO will have the option to choose and take channels as per the original list price."
The effort is to "rid the industry of the broadcaster-platform disagreements that have riddled it in the past."
Uday Shankar, CEO of Star India, said in the same press statement, "This new initiative is aimed at empowering consumers with greater choice, and platforms with the ability to customise their offerings as per the needs of their viewers."
In conversation with the media at his office last afternoon, Shankar spoke about how the deal consists of a series of benefits and incentives for operators. And he explained how it is a two-way street: Broadly speaking, Star's incentives for MSOs or multi system operators are of three kinds. If operators are willing to carry more channels from the Star network, or offer Star's channels to a larger number of their consumers, or offer easier access to Star's channels in terms of LCN positions (for example, if operators place a channel from Star, say Star Gold, in the top three positions within the genre in question, say, the Hindi movie genre, thus making it easier for consumers to find the channel), then, Star will, in turn, offer them incentives with regard to price.
"If you say, 'No I don't want to give you a great LCN'," says Shankar, referring to operators, "then you may have to pay me a slightly higher price. And that's really how we are seeing this business going forward."
The idea, he says, is "to make RIO the trading currency, on the basis of which all deals will happen. In Phase 1 and Phase 2 markets with cable this is how we are looking at doing our deals going forward."
All incentives will be at the individual channel level. And the degree of incentive for operators will vary depending on how much they push Star's channels in terms of the number, and accessibility, of the network's channels, and in terms of the number of consumers the channels are taken to.
All these incentives, Shankar reminds us, are "voluntary" and a "matter of choice for the operator."
"How he (the operator) chooses to design his offering for the consumers is entirely his choice. He can choose which incentive he wants to take and which he doesn't. I cannot insist on them carrying all my channels... if they choose to carry fewer of my channels, then each channel will have to stand on the strength of its own content," Shankar says.
Star hopes this move will lead to more "realistic packaging" within the entire digital cable space, offer more segmented offerings to consumers, and help reduce the disputes between broadcasters and operators.
Speaking of disputes, The Telegraph (Kolkata) carried a report on October 25, which stated: "Star India has told multi-system operators that it would take its 30-channel bouquet off the air from November 5 unless the MSOs buy the channels a la carte... Several MSOs had placed newspaper advertisements on how they were "being forced to remove the Star channels from our packages... in compliance with an order of the tribunal (The Telecom Disputes Settlement and Appellate Tribunal)"."
In fact, Star's initiative, Shankar says, is in sync with the TDSAT's requirement, namely, for the network to provide its channels to all platforms on a transparent, non-discriminatory basis.
How will this new tariff plan affect advertisers? "Advertising gets affected only when the reach of a channel gets affected," answers Shankar, "And reach is strictly determined by the power of its content. I don't think there will be an impact on advertising."