B'cast industry might lose revenue to other media in Q3: Experts
Although economic slowdown is affecting all media platforms, 10+2 ad cap has aggravated problems for b’casting industry as it has taken away its inventory flexibility
The third quarter of every financial year is very happening for the Indian media sector. The festive season, which commands a huge chunk of spends, is eyed by not only by the broadcasting industry, but also other media, especially print, OOH and digital.
But this year is going to be different. As economic slowdown persists, Rupee depreciates and operational developments within the broadcast sector surge, revenues are expected to fluctuate for the Indian television industry.
Although 10+2 ad cap was expected to be implemented in full sway from October 1, players have been reluctantly following the regulation. While major GECs implemented it, news, music and regional channels refrained from practicing it.
Most broadcasters implementing the ad cap were confident that losses in case of cutting down the inventories will not only be recovered by increasing the inventory cost, but the step would boost margins for them. Unfortunately, this went the other way. Citing the bleak economic conditions, most advertisers refused to cater to the increase in rates. Experts feel that broadcasting is likely to suffer revenue loss in the coming quarter, and other media such as print and digital are likely to benefit from it.
Neeraj Vyas, EVP and Business Head, Set Max shared, “There will be fluctuation in the revenues in Q3 for broadcasters. The Diwali season this year will be subdued. Consumer durables and mobile phone sectors have already curtailed spends as their sales are down, which has been coupled by Dollar imbalances and international economic scenario. The 10+2 regulation has definitely shifted spends from TV to print and digital.”
Amit Patil, Media Analyst, Angel Broking mentioned, “Most of the channels have increased their ad rates. In case of print media, one can increase the number of pages but the same cannot be done for broadcast. Broadcast sector is affected the most. Advertisers are sceptical and are more demanding when the time of a slowdown. Q3 will be tough for broadcasting sector and 10+2 cap has only added to their vows, as it has fractured the flexibility of the sector which was prevalent earlier.”
Although some broadcasters are vocal that the third quarter might affect revenues, the gains will be far more in the coming quarters.
Ashish Sehgal, Chief Revenue Officer, ZEEL said, “We might face some revenue glitches in the short-term, but in the long run the sector will definitely benefit. The pricing will get corrected in times to come. Because of DAS, new channels will be launched. This will increase the inventory, which in turn will enhance the AdEx. As far as Q3 is concerned, there will not be as much gain as in other quarters for sure. Growth could have been better had there been more inventory. Economic slowdown is also a part of it. I think the confusions over 10+2, pricing mechanism, CPRP/CPT issues had aggravated the state of confusion and held back spends on the TV sector. So the dip from this angle can be treated as a loss.”
Most of the broadcasters have hiked their inventory cost or are planning to hike them substantially. Advertisers on the other hand are vehemently opposed to this stating that firstly, the ad cap is “self imposed” by broadcasters for their self interest and secondly, the economic environment does not give them a chance to increase their ad spends.
Advertising fraternity is vocal about the fact that some broadcasters who are implementing the ad cap are doing so more out of self interest than following the norm.
Experts feel that 10+2 ad cap is genuinely unclear. Some broadcasters are following 12+2 or 14+2 in one way or the other.
Ajit Thakur, GM, Life OK did not comment on 10+2, but said, “Slowdown will affect all the sectors and not only broadcast.” Life OK is a part of STAR India which is following the ad cap.
Experts have repeatedly mentioned that different networks are dealing with advertisers in their own ways and that customised deals are the flavour of the season. There have also been reports of broadcasters meeting major advertisers to carve out a middle path that benefits both, broadcasters and advertisers.
All these developments point out that the broadcast sector is in a transition phase and although the industry is thinking of a collective solution, it might lose advertising revenue in the coming quarter to other platforms. Economic slowdown is affection all kinds of media, but 10+2 has aggravated concerns for the television industry.For more updates, be socially connected with us on
WhatsApp, Instagram, LinkedIn, Twitter, Facebook & Youtube