For B4U Television’s director and head legal Natasha Fernandes, sustaining a small TV and movie distribution company’s business in the face of a persistent regulatory threat to its main revenue model – advertisements – is the biggest challenge.

Fernandes, with her team of two lawyers at B4U, is currently fighting the rule made by the Telecom Regulatory Authority of India (TRAI), which restricts advertisements per hour by a channel to 12 minutes.

Fernandes, who is acting in the Delhi high court through Tandon & Co for B4U, commented: “For a small company – our main business is advertisement business. If advertisements are limited to a certain time frame it actually affects us. It’s like a very simple calculation.

"Viewers would stick to a channel on the basis of the content, and the content along with the advertisements would determine a channel's viewership. Basically it is the market forces that would determine the advertisements that a channel would carry.”

Ad cap

One of B4U’s contentions, like many other channels litigating against the rule, is that calculating 12 minutes of a clock hour is problematic as programs do not start exactly at the first second of the hour and end at the last – there is usually a gap that can be attributed to packaging shows, she said.

“The cap on advertisement time is unjustified and unfair. Rates and quantum of advertisements on any channel differ depending on content, language, reach, etc. Viewership pattern differs. Carriage fee is an additional burden on small broadcasters who earn minimally or nothing on subscription revenues. In the current scenario, subscription fees that a broadcaster can charge is capped by regulation, but there is no capping on the carriage fees, though TRAI is coming up with regulations for the same, where carriage and subscription is sought to be regulated but marketing fees seems to be still unregulated,” she noted.

Double pricing

Fernandes is also litigating, for B4U, against the Indian Performing Right Society (IPRS). She states that paying for the songs or the films again to copyright societies is leading to double-pricing. "When a party buy films for broadcast, it buys the entire film [including the parts] and broadcasts the film in whole or in parts. While some parties synchronise the music of the film along with another program or use the underlying works separately and independently of the film. Hence when the portions are used independently its fair to pay for the underlying works but when its played as the film itself or a portion of the film, already having paid to acquire the rights for broadcast, again paying for the same to the societies is unfair” she explained.

“Further, copyright societies are raising claims for a percentage of the ad revenue and this seems to affect the revenues of music broadcasting companies. In my opinion the consideration for any acquisition is basis the content and should not be basis the advertisement revenue that the channel may produce,” she added.

But other than these, since 2005, she has not faced any major regulatory or copyright issues ts B4U, she said, as the legal team is “very vigilant and cautious in its functioning”. The shift from traditional TV viewing to internet viewership, according to her, is interesting as it opens new avenues to the business. B4U has its own online channels, linear as well as non-linear, and content is licensed and utilised keeping legal parameters in mind, she said.

Lessons in house

GLC Mumbai 2002 alumnus Fernandes’ career has remained focussed on in-house roles with two development companies, broken by a one year stint practicing in Mumbai’s metropolitan courts, before she joined the media company Star India and finally moved to B4U as the sole lawyer in 2005. Over time she grew the team at B4U to three lawyers including her.

Her experience in various in house roles has taught her that the legal framework for documentation doesn’t change from sector to sector, she said. “Ultimately the commercials and the factuals change; what changes are the facts, the way you deal with facts and understanding the commercial transaction. The rest of the legal documentation clauses, indemnity clauses etc. remain the same.”

“Having worked with corporates for a long time, industry shift doesn’t seem complicated. What one needs to understand is the business transaction and practical functioning, once you understand that, taking care of how your legal draft should cover the commercial details to mitigate business risks and minimize future litigation becomes easy,” she noted.

In her role – acquiring, syndicating and distributing films and TV shows – no regulatory issues crop up and deal negotiations are simple as her team focuses on “win-win” or a fair bargain to both sides, she said, but the detail lies in the treatment of copyright issues surrounding film distribution, which is different from the treatment of those issues during channel distribution.

A small portion of her time is spent dealing with external counsel. She commented: “When you deal with a specific set of law firms, you build a rapport and ultimately spend less time on explaining your company process and requirement, as both understand how the other functions, the requirements and the deliveries, and get more constructive and effective output together.”

B4U mainly works with law firms Khaitan Legal through partner Vaibhav Shukla and senior associate Dhiraj Mhetre, Tandon & Co partner Kunal Tandon, and partner Ravi Kini principal associate Abhay Itagi at MV Kini, said Fernandes.

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