Sun TV Network management expects ad rev to reach FY20 levels in FY22

The company's ad revenue at Rs 309 crore was down 9.4% YoY as ad spends by retail is yet to pick up

e4m by Javed Farooqui
Updated: Feb 17, 2021 8:25 AM
Sun TV Network

Sun TV Network's management expects its ad revenue to reach FY20 levels in FY22 as the economy bounces back and the advertising situation improves with each passing month.

"Our ad revenue will reach FY20 levels in FY22. Things are looking better compared to what they were 6-7 months back. There has been a bounce in the economy," Sun TV Network CFO SL Narayanan told analysts in Q3 FY21 earnings call.

The company's ad revenue at Rs 309 crore was down 9.4% YoY as ad spends by retail is yet to pick up. Retail advertisers' share of advertising on the network fell from 30% to 10% in Q3.

Sun TV Network MD R Mahesh Kumar said that the months of January and February are looking positive as far as advertising is concerned. Explaining the drop in Q3 ad revenue, Kumar said that the retail segment has not fully come on-board. Also, the number of movie premieres saw a significant dip in Q3 FY21 vs Q3 FY20. A lot of special events that happened last year did not happen this year.

With theatres remaining shut, the movie producers and theatres who were big advertisers on the network did not advertise as actively. "Broadly, these 4-5 big-ticket items have contributed to the marginal de-growth in ad revenue," Kumar said.

Talking about the challenges being faced by Tamil GEC Sun TV, Kumar said that in absolute terms there has been no impact, however, its relative share has seen a de-growth. In Q1 FY22, the company will launch big-ticket shows in Telugu, Tamil, and Malayalam.

Kumar said that the drop in Sun TV's share coincides with big-ticket shows like 'Bigg Boss Tamil' on Vijay TV. Further, it has been facing tough competition in certain prime-time slots. "We have rejigged our prime-time from 6.30 to 10 pm. We have been continuously launching new fiction shows and every new show has brought 15-20% incremental growth. We will bounce back to 50% share soon," he noted.

Sun TV Network's ad duration had dropped to 12 minutes/hour during Q3 compared to pre-Covid levels of 16 minutes. The ad volumes have now reached 14 minutes in Q4. The idea was to improve the yield and then release ad inventory.

Besides Tamil and Telugu, the company is betting big on Marathi and Bangla markets. Talking about Sun Bangla, Kumar said that the channel's share has almost doubled from 58 GRPs to 120 GRPs. The company will launch Sun Marathi in FY22.

Sun TV’s Q3 FY21 numbers were mixed as ad recovery was slower and subscription growth was lower than expected but lower amortisation aided net profit. Revenue (standalone) was at Rs 972.3 crore, up 19.3% YoY boosted by IPL revenue. Ex-IPL revenue was at  Rs 763.3 crore, down 6.3% YoY.

Subscription revenues were up 3% YoY to Rs 424 crore. Cable revenue was down 2% YoY to Rs 200 crore while DTH revenue stood at Rs 224 crore, up 8% YoY.

The management said that it has five big-budget movies in the pipeline and three to four are likely to release in FY22. The estimated cost for the film production is Rs 250-300 crore.

The management said that the active user base of its SVOD platform Sun NXT has remained at the same level of 18 million users. The bulk of the users on the platform are through partnership deals with telecom companies. It also said that the Sun NXT gets fixed income from telcos and wherever agreements have ended it has renewed them at a significantly higher value.

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