Question

DD is the India’s premier public service broadcaster with more than 1,000 transmitters covering 90% of the country’s population across an estimated 70 million homes. It has more than 20,000 employees managing its metro and regional channels. Recent years have seen growing competition from many private channels numbering more than 65, and the cable and satellite operators (C & S). The C & S network reaches nearly 30 million homes and is growing at a very fast rate. DD’s business model is based on selling half – hour slots of commercial time to the programme producers and charging them a minimum guarantee. For instance, the present tariff for the first 20 episodes of a programme is $30 plus the cost of production of the programme. In exchange the producer get 780 seconds of commercial time that he can sell to advertisers and can generate revenue. Break-even point for the producer, at the present rates, is thus $75 for a 10 second advertising spot. Beyond 20 episodes, the minimum guarantee is $65 for which the producer has to charge $115for a 10 second spot in order to break-even. It is at this point the advertisers face a problem – the competitive rates for a 10 second spot is $50. Producers are passive about buying commercial time on DD. As a result the DD’s projected growth of revenue is only 6-10% against 50-60% for the private sector channels. Software suppliers, advertisers and audiences are deserting DD owing to its unrealistic pricing policy. DD has the following options; first, it can privatize, second it can remain a purely public service broadcaster and third, it can take a middle path. The challenge is to exploit DD’s immense potential and emerge as a formidable player in the mass media. 1. What is the best option, in your view, for DD to survive in the competitve environment? Justify your answer.

Answer 1

For several years DD was the only broascaster of television programmes in India. After the opening of the sector to the private enterpreneur (cable and satellite channels), the market has witnessed major changes. The number of channels has increased and also the quality of programmes, backed by technology, has improved. In terms of quality of programmers, opportunity to advertise, outreach activities, the broadcasting has become a popular business. Broadcasters too have realized the great business potential in the market. But for this, policies need to be rationalized and be opened to the scope of innovativeness not only in term of quality of programmes. This would not come by simply going to more areas or by allowing bureaucratic set up to continue in the organization.

Strategically the DD needs to undergo a policy overhaul. DD, out of three options, namely privatization, public serivice broadcaster or a middle path, can choose the third one, i.e, a combination of both. The whole privatization is not possible under the diversified political scenario. Nor it would be desirable to hand over the broadcasting emotively in the priavate hand as it proves to be a great means of communication of many socially oriented public programmers. The government could also think in term of creating a corporation and provide reasonable autonomy to DD. So far as its advertisement tariff is concerned that can be made fairly competititve . however, at the same time cost of advertising is to be compared with the reach enjoyed by the DD. The number of viewers may be far more to justify higher tariffs.