TV ad spend amounts to around Rs 27,000 crores per annum (around $4bn). How that cake gets sliced up is driven by TRP ratings which measure the popularity of various programs and hence of the channels which air them. With Mumbai Police in the midst of an investigation regarding the sanctity and reliability of these ratings, the author – a former Director General of Doordarshan, the Indian state owned broadcaster – takes us back to a similar ratings scandal from the preceding decade:
“The TRP (Television Rating Point) scandal unearthed by the Mumbai police on Thursday, which has shocked the nation, actually goes back nearly 20 years. As DG Doordarshan (DD) in 2002-3, I had encountered the racket which was rampant and was working against the national broadcaster. Even though Doordarshan had 35 out of the top 50 programmes in all TV homes (Terrestrial and Cable & Satellite-C&S), Television Audience Measurement (TAM) did not show even a single programme in the first 50 slots in the C&S homes category. When DD National’s prime time news share was 92 per cent, a private channel which described itself “sab se tez” with just 4 per cent share was declared as number one channel by TAM.
When our suspicions grew, I started investigating how the TRP system works…Curious to know how TAM works, I decided to get a “people-meter” installed on my office television. I observed that connecting the meter involved removing the back cover of the TV and soldering two wires from the meter on to the tuner of the television. Why would anyone allow such tinkering with his TV set, losing its warranty, I wondered.
The data card was collected twice a week by a worker from AC Nielsen. I asked him whether any payment is made to the households where the meters are installed. At first, he denied it. Later, when I had befriended him over tea and samosas, he came out with the truth and revealed that the households are given incentives, in kind, like a pressure cooker or a dining set. The cat was out of the bag!
To dive deep into the issue, it is important to understand how the people-meter works. This is a set-top box with a remote control where the buttons are assigned to each member of the family. Every member who is watching a particular programme has to press the assigned button and when they go out of the room, they have to press the button again. Who would have the patience to follow this drill throughout the day? Except the poor, who are paid — as little as 400 rupees per month to keep the bribing channel open, throughout the day — as was discovered in Mumbai.
Another question was that there were only about 2,000 meters measuring the audience, and this figure was being extrapolated for the country’s one-billion population. Even the number of cities where the meters were installed was as few as a dozen. The demand was repeatedly raised that the number of cities and metres installed should be increased.
There was once a news item revealing the addresses where the metres were installed. The embarrassed company apologised for this revelation and promised to ensure complete secrecy. But the game was out.”
The author says that in due course TAM was scrapped and a new system was created and this ushered in a new phase of skulduggery: “The Ministry of Information and broadcasting (MIB) in 2008 asked the Telecom Regulatory Authority (TRAI) to frame policy guidelines for rating agencies. TRAI recommended an approach of self-regulation through the setting up of an industry-led body, the Broadcast Audience Research Council (BARC).
A committee constituted by the MIB under chairmanship of Amit Mitra, the then secretary general, Federation of Indian Chambers of Commerce and Industry (FICCI), made extensive recommendations for transparent and credible self-regulatory mechanism for BARC to follow.
Though the BARC came into existence in July 2010, it did not make any progress for three years. The MIB notified Policy Guidelines for Television Rating Agencies in India in January 2014 and accredited BARC on July 28, 2015, to carry out the television ratings in India. TAM exited TV viewership measurement on February 29, 2016. Since then, BARC is the sole provider of TV rating services on a commercial basis. At present, BARC has 40,000 sample TV households in their measurement universe (2019) of 153.5 million TV households, divided almost equally between urban and rural areas.”
BARC, in turn, hired a research agency called Hansa Research to do the actual work and Hansa’s ex-employees are now under the spotlight – see https://indianexpress.com/
So what is the way forward? The author says that the widespread use of set-top boxes by 120 mn Indian households actually makes it quite straightforward to figure out what programs are being watched and for how long. That in turn begs the question “Why on earth does the broadcasting industry in India allow $4bn of ad spend to be directed basis a sample of only 40K Indian families?” The next interesting question is “Who will benefit if the credibility of the current TRP construct is reduced?” I think we know the answer to that question. There is never a dull moment in India.
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
