This story first appeared in DNA Money edition on Fridday, June 10, 2011.
The broadcasting industry in the country is expected to witness considerable growth in advertising revenue this fiscal. More significantly, given that the recently concluded Indian Premier League (IPL4) saw less-than-expected viewership, general entertainment channels (GECs) are expected to surpass the industry growth.
A recent report by Kotak Institutional Equities Research said the flagship cricket property’s grip on viewers weakened in the fourth season with an average all-India rating of around 3.4 TRP compared with more than 4.0 TRP in the previous three seasons. The Indian team’s victory in the Cricket World Cup, which preceded the IPL season, impacted viewership somewhat, Amit Kumar, analyst with Kotak Institutional Equities Research, said in the report.
Over the last four years, the IPL has become a Rs800 crore advertising property, with the exception of the calendar 2009 season, which was hit by the economic downturn.
As far as IPL’s impact on advertising for cable and satellite (C&S) broadcasters in the first half of this fiscal is concerned, analysts estimate it to be modest, at around 5% as against 10% previously, mainly due to the advertising overdose by many categories during the Cricket World Cup.
“We believe the structural impact of IPL on cable and satellite advertising and overhang on general entertainment channels is past, even though a marginal recovery in IPL ratings is possible next season,” said Kotak’s Kumar.
Rahul Kundnani, analyst, SBICAP Securities Ltd, said advertising revenues for GECs is likely to increase 10-15%, also because most players have released new programming content.
“Channels typically wait for big sporting events like the IPL and Cricket World Cup, which is why fourth quarter (Q4) tends to show a marginal decline compared with the other quarters,” said Kundnani.
“Thus, sequentially, advertising revenues will go up for GECs because of a considerable line-up of new programming content in Q1FY12. Generally, second and third quarters are the best quarters for GECs owing to festival season. While the overall Indian broadcasting industry is expected to see 15% growth in advertising revenues, market leaders are likely to surpass the industry growth rate,” he said.
Colors and Sony TV have already gone on air with new content in the form of reality shows like Khatron Ke Khiladi (season 4), X Factor (music reality show) and a few other fiction shows.
Big-time rivals Star TV and Zee have announced their new non-fiction and fiction shows, but are yet to go on air with them —- Zee’s music reality show Saregamapa Little Champs is the only exception and it has just got on air.
Officials of both Star TV and Zee were not available for a comment.
A questionnaire emailed to the spokespersons of the companies remained unanswered at the time of going to print.
Leading Indian advertising agencies Mindshare and Madison have projected a 20-26% growth in advertising for the C&S players this fiscal.
Analysts tracking the sector, however, attribute the marginal slowdown in advertising growth to the fact that the estimates have taken into account the rising interest rate and moderating economic growth scenario.
Going forward, analysts see the base of C&S households/ viewers growing as direct to home (DTH) spreads in rural India. This, in turn, is expected to show improved traction in advertising rates of broadcasters.
“The 10-12% traction in advertising rates of broadcasters and our assumed 15% advertising growth (Zee) compares weakly to over 10% CAGR in C&S households in last few years, notably given the market expansion in the Hindi belt,” noted Kumar.
Despite a modest advertising slowdown estimated in FY12, analysts feel the structural growth in advertising and subscription revenues of Indian C&S broadcasters remains intact. However, competition and fragmentation continue to be key risks, especially with existing players such as Sony TV targeting resurgence.
The recent FICCI-KPMG report on the Indian media and entertainment industry estimates the Indian television advertising space to be around Rs11,800 crore. The Hindi GEC space, however, is very cluttered, with a size of over Rs2,700 crore, attracting nearly 30% viewership. It is envisaged the sector will continue to attract robust revenues and also see consolidation going forward.
The broadcasting industry in the country is expected to witness considerable growth in advertising revenue this fiscal. More significantly, given that the recently concluded Indian Premier League (IPL4) saw less-than-expected viewership, general entertainment channels (GECs) are expected to surpass the industry growth.
A recent report by Kotak Institutional Equities Research said the flagship cricket property’s grip on viewers weakened in the fourth season with an average all-India rating of around 3.4 TRP compared with more than 4.0 TRP in the previous three seasons. The Indian team’s victory in the Cricket World Cup, which preceded the IPL season, impacted viewership somewhat, Amit Kumar, analyst with Kotak Institutional Equities Research, said in the report.
Over the last four years, the IPL has become a Rs800 crore advertising property, with the exception of the calendar 2009 season, which was hit by the economic downturn.
As far as IPL’s impact on advertising for cable and satellite (C&S) broadcasters in the first half of this fiscal is concerned, analysts estimate it to be modest, at around 5% as against 10% previously, mainly due to the advertising overdose by many categories during the Cricket World Cup.
“We believe the structural impact of IPL on cable and satellite advertising and overhang on general entertainment channels is past, even though a marginal recovery in IPL ratings is possible next season,” said Kotak’s Kumar.
Rahul Kundnani, analyst, SBICAP Securities Ltd, said advertising revenues for GECs is likely to increase 10-15%, also because most players have released new programming content.
“Channels typically wait for big sporting events like the IPL and Cricket World Cup, which is why fourth quarter (Q4) tends to show a marginal decline compared with the other quarters,” said Kundnani.
“Thus, sequentially, advertising revenues will go up for GECs because of a considerable line-up of new programming content in Q1FY12. Generally, second and third quarters are the best quarters for GECs owing to festival season. While the overall Indian broadcasting industry is expected to see 15% growth in advertising revenues, market leaders are likely to surpass the industry growth rate,” he said.
Colors and Sony TV have already gone on air with new content in the form of reality shows like Khatron Ke Khiladi (season 4), X Factor (music reality show) and a few other fiction shows.
Big-time rivals Star TV and Zee have announced their new non-fiction and fiction shows, but are yet to go on air with them —- Zee’s music reality show Saregamapa Little Champs is the only exception and it has just got on air.
Officials of both Star TV and Zee were not available for a comment.
A questionnaire emailed to the spokespersons of the companies remained unanswered at the time of going to print.
Leading Indian advertising agencies Mindshare and Madison have projected a 20-26% growth in advertising for the C&S players this fiscal.
Analysts tracking the sector, however, attribute the marginal slowdown in advertising growth to the fact that the estimates have taken into account the rising interest rate and moderating economic growth scenario.
Going forward, analysts see the base of C&S households/ viewers growing as direct to home (DTH) spreads in rural India. This, in turn, is expected to show improved traction in advertising rates of broadcasters.
“The 10-12% traction in advertising rates of broadcasters and our assumed 15% advertising growth (Zee) compares weakly to over 10% CAGR in C&S households in last few years, notably given the market expansion in the Hindi belt,” noted Kumar.
Despite a modest advertising slowdown estimated in FY12, analysts feel the structural growth in advertising and subscription revenues of Indian C&S broadcasters remains intact. However, competition and fragmentation continue to be key risks, especially with existing players such as Sony TV targeting resurgence.
The recent FICCI-KPMG report on the Indian media and entertainment industry estimates the Indian television advertising space to be around Rs11,800 crore. The Hindi GEC space, however, is very cluttered, with a size of over Rs2,700 crore, attracting nearly 30% viewership. It is envisaged the sector will continue to attract robust revenues and also see consolidation going forward.
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