At present, over 90 per cent of TV channels are in the red and not able to invest in quality programming, even as smaller/niche channels with big-ticket pedigrees – have had to bow out, with Imagine TV being the latest.

With digitalised cable TV norms to be rolled out by the Information and Broadcasting Ministry, the Indian television industry is gearing up for the sea change that this is expected to usher in. Under the norms, television viewers would get to choose a minimum hundred free to air (FTA) channels at a maximum retail price of Rs100. Cable operators would need to mandatorily offer a 'basic service tier' (BST) to viewers across country, which would consist of 100 free to air channels including 18 mandatory Doordarshan channels plus the Lok Sabha channel.

Customers would also get to choose another option, which includes some pay channels and pay a monthly price upto Rs150, according to the Trai rules. According to industry sources, banning carriage fees in the new digitisation of cable distribution regime from 1 July was necessary to ensure that government could plug the huge revenue leakage upwards of Rs10,000 crore annually due to the levy of huge carriage fees by cable companies and gross under-declaration of their subscriber base.

At present, over 90 per cent of TV channels are in the red and not able to invest in quality programming, even as smaller/niche channels with big-ticket pedigrees – have had to bow out, with Imagine TV being the latest.

According to industry sources, TV channels collectively paid at least Rs 3, 500 crore last fiscal to cable companies and distributors as carriage and placement fees, of which Rs 1,500 crore was paid by news channels alone. These carriage fees saw many TV channels end up in the red immediately, which denied the government a large income tax earning opportunity exceeding Rs 1, 000 crore per year.

According to another industry estimate, given the estimated subscription revenues of all MSOs/LCOs in the country, the government had lost around Rs 5,950 crore over the five-year period from 2006 to 2011 by way of service tax alone due to under-declaration while the evasion of income tax stood at around Rs17,413 crore over the five-year period 2006 to 2011; and loss of entertainment tax by states is in addition to that amount. (ssns)