Sharp recovery seen in GEC genre: Report

The report by Elara Capital also states further recovery for pricing in the GEC genre is expected only after the IPL is over as the latter has extracted a huge chunk of ad budget

e4m by exchange4media Staff
Updated: Sep 30, 2020 1:11 PM

The general entertainment channel (GEC) genre, which was down 60- 65% in terms of pricing during April-May for the TV industry, has seen a sharp recovery and is down a mere 25-30%, says a report by Elara Capital.

Pricing for non-fiction properties was down 25% vs pre-COVID in the current state, which too indicates healthy recovery.

However, further recovery for pricing in the GEC genre is expected only after the Indian Premier League (IPL) is over post November, as the latter has extracted a huge chunk of ad budget.

Non-fiction properties like Kaun Banega Crorepati (KBC) are seeing a decline of 20% in overall ad revenue due to brands from China not being present (they contribute 7-8% of overall ad pie, now becoming half) and the setback due to COVID-19.

In terms of regional performance, Sun TV has been able to maintain pricing, and we expect viewership share to stabilize at pre-COVID levels of 39% whereas other genres like Telugu, Malayalam and Kannada continue to struggle for advertising, given regular content.

Hindi news and movie genre, which contribute combined 20% of spend for TV advertising, are estimated to outperform the industry average for the full year and will decline at almost half the rate of the industry decline.

As per the report: “Our April’s call on TV ad spend remains intact. In terms of performance for FY21, Q1 reported a decline of almost 60% in TV ad spend, including the IPL last year; excluding the IPL, this decline was almost 40% YoY. Q2 has reported a decline of 30%, which shows a recovery QoQ. Based on our channel checks, we expect a 5% YoY growth in ad spend in Q3FY21E, backed by the festival season and expect Q4 to be flat YoY despite low base of March. This translates into a decline of 22% for the TV ad industry for FY21E, excluding IPL, which is in line with our estimates as per a 27 April note, Why TV’s viral boost is a brief antidote, in which we had expected a 25% YoY decline in ad revenue for FY21E. However, if IPL were to be included in FY21E, the decline for the TV ad industry would be 15% YoY.”

The report also says among verticals, FMCG was as big driver in H1 as it contributed 58-60% of TV ad spend vs the pre-COVID annual average of 49-50%; this was backed by brands, such as Hindustan Unilever and Dabur.

The clothing, fashion and retail vertical, which contributes 3.5% of TV ad spend, will take time to recover, due to fewer footfalls in malls.

The auto vertical, which contributes 7.1% of TV ad spend, has been doing well due to the new launches in the recent past that has stepped up the competitive intensity between firms.

However, this may stabilize for ad spend post the festival season. eCommerce as a vertical has been as strong as FMCG for supporting TV ad spend and the momentum will continue in the near to medium term.

Regional channels have a lower share towards national advertisers (40% share) vs the Hindi channels (70% share).

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