(This post has been co-authored with Prashant Reddy)
The Supreme Court ruled that broadcasters broadcasting sporting events of national importance must provide ‘clean’ feeds to Prasar Bharati. The issue in this case revolved around interpreting Section 3 of the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (“Act”) and Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Rules, 2007 (“Rules”).
The purpose of the Act is to ensure access to a larger audience of listeners/viewers of sporting events of national importance. The Act seeks to achieve this objective by putting in place a statutory license system whereby the broadcasters (who owns the broadcast reproduction rights under Section 37 of the Copyright Act, 1957) of such sporting events are required to mandatorily share broadcasting signals with Prasar Bharati, for which, Prasar Bharati shares a part of its advertisement revenue with the broadcaster. Through this judgement, the court not only requires the broadcaster to share ‘clean’ feeds to Prasar Bharati i.e. without any commercial advertisements, but also turns the licensing system upside down. The court has held that if the broadcaster provides feeds with on-screen-ads, then it is the broadcaster who is required to pay Prasar Bharati from its share of advertisement revenues. Therefore, Prasar Bharati not only benefits from – i) the live signal, ii) its own ad revenues but also iii) earns a share of the broadcaster’s advertisement revenues. The basis on which this compulsory payment is to be calculated remains unclear because broadcasters do not directly earn any revenue from the on-screen-ads.
Sporting events, especially cricket in India, has over the years become a hot bed for advertising and advertisements. Advertising during these events seems to have become so lucrative that even the government through Prasar Bharati wants to have a share of the pie or else, as it appears, wants certain kind of ads to be stopped altogether.
From advertisements first being shown only during breaks, we now see colourful logos all over the screen even during the match – imprinted on the ground, on bats, on the boundary lines, on the players, in the sky on balloons, and now also on a panel on the screen that is shown along with information about player statistics, run rates etc. This case deals not with the traditional ads that are shown during breaks but with ads that appear on the screen during the match.
The Appellant (Star Sports India Private Limited) entered into a contract with ICC to broadcast cricket events organised by the ICC in India. Thereafter, as required under Section 3 of the Act, the Appellant informed Prasar Bharati that it will share the live signals of these matches with Prasar Bharati but also added that the signals not only cover the event per se but also have certain added elements. These added elements are special features that enhance a viewer’s experience of the game such as player statistics, score cards etc. These features are inserted on the screen by the event organiser i.e. ICC and form part of the ‘world feed’ (same feed provided to broadcasters all over the world). These special features often contain logos of sponsors and are referred to as ‘on-screen-credits’. On receiving this information, Prasar Bharati replied to the Appellant stating that under law the Appellant is obligated to share signals without any ads. To this the Appellant replied stating that the logos that are a part of the ‘on-screen credits’ are booked by event organisers i.e. ICC and it is ICC who earns revenues from these ads. The Appellant itself has nothing to do with the on-screen-credits and hence these ads are not ‘its ads’. However, Prasar Bharati refused to accept this reasoning.
The Appellant then approached the High Court under Article 226 praying for a declaration that the live broadcasting signals shared by the Appellant with Prasar Bharati under Section 3 of the Act shall be the best feed as received from the event owner, inclusive of all features ands commercials of the event owner, but without insertion of any of its own commercial advertisements. The High Court, however, dismissed the Appellant’s petition and held that as per Section 3 of the Act, the live signals have to be provided without any commercial ads, whether booked by the Appellant or not.
Section 3 (1) of the Act obligates a ‘content rights owner or holder’ and a ‘broadcast service provider’ that broadcasts sporting events of national importance to mandatorily and simultaneously share the live broadcasting signal, without its ads, to Prasar Bharati. Sub-section (2) of Section 3, appears to put in place an advertising sharing revenue for the revenue Prasar Bharati earns out of its own ads, to be shared in the ratio of 75:25 between the broadcaster and Prasar Bharati in case of television coverage and 50:50 in case of radio coverage. This section is therefore like a statutory license whereby the Act mandatorily requires sharing of signals to Prasar Bharati who in turn pays royalty for the same.
Further Rule 3(3) states “signals to be shared with Prasar Bharati are to be the best feed with all features as that provided to a broadcast service provider in India, free from commercial advertisements.”
1. Whether on-screen-credits can be included in live signals shared with Prasar Bharati
The Appellant argued that as per Section 3(1), the Appellant was obligated to share live signals, of not only the event but also the special features, with Prasar Bharati on as ‘as is where is basis’ as received from the event organiser and without its own advertisements. Since the Appellant did not book the ads that feature on the ‘on-screen-credits’ it did not earn any revenue from these ads and hence these ads did not qualify as ‘commercial ads’ with respect to the Appellant. Also, since the Appellant had no control over the live signals which included advertisements of the event organiser it was argued that these were not ‘its’ ads.
On the other hand, Prasar Bharati argued that the word ‘its’ in Section 3, pertains to either the ads of the – content right owner or holder or the service provider. Therefore, even if the on-screen logos/ads were booked/inserted by the event organiser (ICC), they are ads for the purpose of Section 3. Thus, the argument was that any live signal shared with Prasar Bharati must be free of any ads.
The Supreme Court accepted Prasar Bharati’s arguments. The court also held that since ICC was commercially gaining from the on-screen-credits, they were ‘commercial ads’ and it did not matter that the Appellant itself was not directly earning revenues from such ads. Once it was decided that the ads were commercial ads, then reading Section 3 and Rule 3(3), it was held that the best feed has to be provided and the feed has to be free from commercial advertisements.
Though the case concerned only the on-screen-credits, the ruling is so broad that it could possibly cover other commercial ads not booked by the broadcaster such as logos on bats, on players, on the boundary, on the ground etc. Taking this argument to its logical end, are we going to land up in a ridiculous situation with no ads on screen whatsoever?
2. Double bonanza – Appellant to share feed and revenues if live signal is shared with on-screen-credits
As explained above, sub-section (2) of Section 3, provides for advertisement revenue sharing between the broadcaster and Prasar Bharati. Since the broadcaster is providing the feed, without its ads, Prasar Bharati is required to share the revenue it earns from the ads that it books and shows during the event, to the broadcaster.
However, as per this judgement the court seems to have introduced a new and reversed payment setup! As submitted by Prasar Bharati in para 18 of the judgment – “Mr. Rohtagi also referred to the provisions of sub-section (2) of Section 3 of the Act to highlight the purpose of sharing the revenue which was in the ratio of 75:25, i.e., 75% for the Broadcaster and 25% revenue was to be given to Prasar Bharati. His submission that the statutory provision was enacted to compensate Prasar Bharati for showing the advertisements which were booked by the Broadcaster or even event sponsors who had earned money therefrom.”
In this regard, the Appellant argues, in para 12 of the judgement “In the instant case when the appellant had not earned any income from these advertisements as these were not booked by the appellant, there was no question of sharing alleged income.”
However, the court did not consider the practical implications of Prasai Bharati’s demands i.e. the broadcaster cannot share any revenue from these ads because it does not earn any revenue from them. The court held in favour of Prasar Bharati by stating “Therefore, Section 3(1), in the first instance, mandates that the sharing of live broadcasting signals with Prasar Bharati has to be ‘without its advertisements’. Exception is, however, made in sub-section (2) of Section 3 which enables the broadcasting service provider to even share the contents along with advertisements, but subject to the condition that there has to be a sharing of revenue in the proportion prescribed in sub-section (2) of Section 3. As aforesaid, when live broadcasting signal is shared containing advertisements, those advertisements have much larger viewership because of its telecast/broadcast on Prasar Bharati. The benefit of advertisement in such a case would accrue to those who have booked the advertisements and the service provider, in such an eventuality would definitely be in a position to charge much more from the advertisers.”
And finally held in para 33 of the judgement – “From our aforesaid discussion, it becomes clear that the sharing of the signals has to be without any advertisements and if the advertisements are also to be included in the signals, there has to be sharing of the revenue”
Therefore, while the Act does not contemplate a situation where broadcasters can share signals with ads, the court seems to allow such sharing but on the condition that the broadcaster shares its advertisements revenues with Prasar Bharati. The court seems to have converted Section 3(2) into exception and has changed the colour of this sub-section altogether. Moreover, the ruling on this point is vague. As contended by the Appellant, they earn no revenues from the on-screen-credits, so it not clear what revenue they can share with Prasar Bharati. Given that such a payment has to be made, it is surprising that the court did not take into consideration how these on-screen-credits/ads are to be valued from the perspective of the broadcaster. Further, since Prasar Bharati is not losing out on its advertisement revenue (for the ads it shows during the break), Section 3(2) cannot be turned into an ‘exception’ because Prasar Bharati will also still have to pay the broadcaster. This judgement leaves much to imagination and is much too unclear for practical implementation.