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NDTV pins hopes on sponsors to make up for fall in revenues from advertising

01-March-2017
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NDTV pins hopes on sponsors to make up for fall in revenues from advertising

As the remonetisation phase gains momentum, NDTV is pinning its hopes on alternate sources of revenues besides advertising. Exchange4media has learnt that NDTV has brought in sponsors like Amity University for NDTV 24*7. The underlying belief is that “sponsorship will make for the fall in revenues” from advertising which suffered acutely in the third quarter.

While advertisers buy select ad slots available on air to promote a product, sponsors are associated with the entire channel irrespective of the air time. The sponsorship deal offered by NDTV is being described more like an associate partnership. The focus clearly has shifted from depleting advertising revenues courtesy demonetisation to slightly long-term sponsorship arrangements. 

The listed company, however, is impressed with the success that its digital operations have tasted. “We are very happy with the growth on the digital side,” said KVL Narayan Rao, Group CEO at NDTV. As far as the digital business is concerned, the third quarter of the current fiscal saw NDTV post a profit (EBITDA) of Rs 7 crore.

However, for the quarter ended December 31, 2016, NDTV’s total revenues went down by Rs 17 crore to Rs 133 crore when compared with the corresponding quarter last fiscal. The most significant dip was in relation to broadcasting revenues. It recorded a decrease of Rs 22 crore from Rs 130 crore to Rs 108 crore.  

Reliable sources at NDTV informed exchange4media that the “dip in results” was not just restricted to the news broadcast industry. It was a “sentimental response to demonetisation” though the weak financial showing wasn’t justified in any manner whatsoever.

Costs are also being carefully contained by New Delhi Television-led by Prannoy Roy and Radhika Roy to tame expenditure. Reportedly, the aim is to lessen the sum total of costs by not less than 20%. On the campaign trail in Uttar Pradesh and Punjab as also in Delhi, NDTV’s reporters have experimented with shooting on mobile phones in a big way. Besides being an innovative content creation exercise, usage of mobile phones instead of expensive broadcast cameras can help reduce expenses in the long run.

NDTV leadership’s traditional belief has been that the third quarter ranging from October to December is an “excellent” one from a financial standpoint. However, the demonetisation of high currency notes on November 8 betrayed the long-held conviction. As per the Pitch Madison Advertising Report (PMAR) 2017, demonetisation caused the adex to slip by Rs 1,650 crore in the months of November and December.

In November itself, Saurav Banerjee, Director Finance & Group CFO, NDTV shed light on the seasonal nature of the broadcasting business. “As a thumb rule, 40% of the revenues come in the first half and 60% in the latter,” he had said adding that the losses were bound to go down if the company made sufficient money in the third and fourth quarter. While conventional business wisdom was sent for a toss due to demonetisation, the road to recovery will be a long and arduous one for broadcasters.

Their businesses suffered due to a policy decision at a time when they were accustomed to ride high on the back of the festive spirit and holiday season. If PMAR 2017 is to be believed, advertising spends will exhibit buoyancy in 2017 by registering a growth of 13.5% taking the worth of advertising and media industry to Rs 56,152 crore. 

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