NTO & economic slump weigh down Q3 revenue for broadcasters
According to industry experts, the weak quarter was due to a dip in advertising revenue; channels withdrawing from Free Dish also blamed
The three broadcasters witnessed a decline in ad revenues whereas subscription revenue has grown on the back of NTO
The year 2019 turned out to be a challenging year for the Indian media and advertising industry due to the economic slowdown and the Telecom Regulatory Authority of India (TRAI) coming up with the New Tariff Order.
These factors combined also led to a lacklustre festive season.
In case of traditional media, a quarter-wise analysis shows that unlike most years when Q4 shows a blip on account of the festive season, last year it was during Q2 on the back of IPL, the Cricket World Cup and General Elections. It was in fact Q3 and Q4 that showed a de-growth of 3% and 7% respectively.
According to the recently unveiled Pitch Madison Advertising Report (PMAR) 2020, adex in 2019 grew at 11% (as compared to the projection of 13.4% and 15% growth in 2018). The report states, “If we bifurcate Adex into Traditional (TV+Print+Radio) then it has grown at a mere 6%, just half of the 12% growth that it achieved in 2018.”
However, despite taking many knocks during the year, TV continues to be the largest contributor to adex with a 37% share, despite the medium growing at 8%, the third lowest growth rate in a decade.
Now, as we enter the last month of the 2019-2020 fiscal, let’s take a look at the third quarter results of three of the major listed broadcasters - Zee Entertainment Enterprises Ltd, Sun TV Network and TV 18 (Entertainment (Viacom18+AETN18+Indiacast).
Zee Entertainment Enterprises Ltd
In Q3, ZEEL’s total revenue saw a decline of 5.5% (YoY) to Rs 2048.7 crore while it’s advertising revenue for the quarter fell by 15.8% (YoY) to Rs 1230.8 crore. A further break up shows the domestic advertising revenue dropped 15.7% (YoY) to Rs 1,157 crore. International advertising revenue for the quarter stood at Rs. 73.8 crore.
Meanwhile, the subscription revenue for the quarter stood at Rs 713.7 crore, seeing a growth of 15.4% YoY. Domestic subscription revenue grew by 21.7% (YoY) to Rs 631.7 crore, and international subscription revenue was posted as Rs 82 crore.
As per media experts, the reasons ZEEL had a weak quarter was due to a fall in advertising revenue which in turn is due to the economic slowdown and TRAI’s New Tariff Regime. Withdrawal of channels from the Free Dish Platform also contributed to the same.
Punit Goenka, Managing Director and CEO, ZEEL, said in the earnings statement, “Third quarter is normally a strong growth period for us. However, the tough macro-economic environment led to a decline in our ad revenues. Most of our advertisers are going through a slow growth period and that has led to a cut in advertising spends.”
Believing that ZEEL will start seeing an improvement from the next quarter, he further added: “The proposed changes to the tariff order by TRAI are being challenged in the court and we are awaiting the final verdict. However, I am confident that our strong portfolio of channel across markets will enable us, to navigate any regulatory changes in the most efficient• manner.”
TV18 (Entertainment (Viacom18+AETN18+Indiacast)
TV18’s consolidated operating revenue declined by 3% (YoY) to Rs 1425 crore as compared to Rs 1475 crore. The entertainment revenue declined by 4% to Rs 1137 crore as compared to Rs 1184 in Q3FY19. The subscription revenue saw a 40% growth to Rs 458 crore.
Meanwhile, the operating EBITDA saw a growth of 262% to Rs 245 crore as compared to Rs 68 crore in Q3FY19.
On the subscription growth, the broadcaster said implementation of NTO has created a transparent and non-discriminatory B2C regime, which continues to boost their TV subscription revenue. Improved distribution tie-ups across cable operators and telcos have brought the consumer closer to broadcasters’ class-leading content bouquet at an affordable optimum price.
Though the broadcaster has seen a growth in subscription revenue, advertising revenue continued to remain under pressure. The broadcaster said, “The prevalent weakness in macro-environment and sluggish spending appetite by advertisers continued to drag ad-revenue down YoY for both News and Entertainment. Shift of channels from DD Free Dish to the Pay ecosystem continues to impact Hindi GEC ad-revenues for all the top broadcasters. Government initiatives to boost growth and a natural refresh-and-recalibration of ad budgets should revive ad growth as we head towards the new fiscal.”
Sun TV Network
Sun TV Network, too, witnessed a growth in subscription revenue on the back of the NTO implementation and TN state digitisation. Revenue for the quarter was up by 18% at Rs 411.85 crore as against Rs 349.60 crore for the corresponding quarter ended December 31, 2018.
Also, the Profit After Taxes for the current quarter grew by 6% at Rs 373.45 crore as against Rs 351.33 crore for the period. Meanwhile, the network reported a decline in revenues by 9.89% YoY to Rs 814.97 crore.
According to media experts, Sun TV network too faced the decline in ad revenues due to similar challenges as faced by other networks.
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