After Zee Entertainment, Sun TV slashes channel prices ahead of TRAI rules

After Zee Entertainment, it is the turn of Sun TV to slash its channel prices with effect from Sept 1 in anticipation of the implementation of new channel pricing rules by TRAI.

The Telecom Regulatory Authority of India had, three months ago, announced that media companies and cable and DTH companies will no longer be allowed to push unnecessary channels down consumers’ throats by pricing individual channels at high rates.

At present, most DTH operators price individual channels at very high rates to discourage people from buying channels one-by-one and to force them to buy packs or bouquets.

When a consumer buys a pack, the DTH operator can make money in two ways: First, it gets a subscription free from the consumer, and secondly, it gets money from the channel owner as well for having included the channel in the pack.

However, if most people start buying channels one-by-one, then the second source of revenue — called carriage fees — will become irrelevant.

For broadcasters, this will mean the end of their ability to push their less-popular channels to consumers by bundling them with popular channels.

Under the new TRAI rules, the sum of the individual prices of channels included in a package cannot be more than 17.65% higher than the price of the overall pack.

In other words, if the total cost of a pack consisting of 10 channels is Rs 85, then the sum of the prices of the 10 individual channels cannot be more than Rs 100. At present, it is likely to range from Rs 300-400.

Zee Entertainment has already tweaked the prices of its individual channels to conform to the new rule, and now Sun TV — which operates around 38 channels — has also done so by bringing down individual prices.

With effect from September, it has reduced the maximum retail price of Sun TV HD to 19 per month per connection from Rs 40 at present. With this, the price of standard definition version of Sun TV and HD version of the same channel has become the same.

Similarly, it has reduced the price of KTV HD and Gemini TV HD to Rs 19 from Rs 40, while the price of newly launched Surya HD has been reduced to Rs 15 from Rs 20.

Even as Zee and Sun — which have both channels and DTH businesses — seemed to have welcomed the news, Star India — which has only channels and no DTH — and Airtel and Tata Sky — which have only DTH and no channels — have challenged the new rules in court.