TV Monitor July 2020: GECs comeback; movies, news fade away

Guest Author: Karan Taurani, Vice President, Elara Capital, analyses overall performance of listed broadcasters

e4m by Karan Taurani
Updated: Aug 8, 2020 4:26 PM

Zee Entertainment: Anmol drives gains in GEC

Z reported strong performance in July, with the GEC live shows resuming from the second week of the month. It was able to gain market share across all regional genres on a MoM basis and also return to pre-COVID levels or move ahead in a few genres like Tamil, Telugu and Marathi. It continues to lead in regional genres, such as Marathi and Kannada, gaining 180bp in the Marathi genre and 185bp MoM in the Kannada genre; however, Z slipped to the second spot in the Bangla genre, losing 60bp MoM as STAR Jalsha’s programs, Mohor and Ke Apon ke Por gained traction during the month over Z’s shows. Resumption of GEC shooting in July saw viewership shift from regional movie channels to GEC channels, benefitting Z viewership. Within the Tamil and Telugu genres, Z has witnessed significant traction to narrow its gap with peer channels within the category, as Zee Tamil jumped to the second spot with gains of 150bp MoM while Zee Telugu gained 460bp MoM.
Further, Zee Cinema regained momentum amid stiff competition with STAR Gold to come in second despite losing 145bp MoM to 21.3% viewership share. Within the GEC genre, viewership share grew slightly for Z channels. Zee TV came in seventh in the GEC urban segment despite gaining 305bp MoM for 5.6% viewership share, as it failed to make a strong comeback with newer content, relying solely on repeat telecast of the old shows. Zee Anmol and Z’s Big Magic did better within the Hindi GEC (rural) genre with a combined viewership share of 22.6%, up 115bp MoM. GEC viewership gains for Z was largely supported by Zee Anmol, which saw strong gains within the Hindi GEC (rural) genre of 655bp MoM to 15.9%, as the channel moved back to FTA from pay post NTO implementation last year.

Sun TV Network: absence of non-fiction retains sheen

Sun TV, the flagship channel, retained its top position within the Tamil genre with gains in viewership share by 50bp MoM to 43.4%; KTV, Sun TV Group’s other movie offering in the Tamil genre, lost steam and slipped to the fourth spot, with an 13.9% share, down 160bp MoM. Within the Kannada genre, Udaya TV remains in the second spot, losing share by 165bp MoM to 22.5% to Zee Kannada. In the Telugu genre, Gemini TV slipped to the fourth position with a 17.7% share, down 505bp MoM. SunTV viewership share remains strong across genres on a quarterly basis, backed by long movie catalogue as not all shows and channels have returned to original programming.

TV Today Network: Aaj Tak still stable despite Unlock 2.0

Aaj Tak, the flagship channel of TV Today Network, continues to dominate the Hindi news genre, with a viewership share of 26%, up 58bp MoM. It retained its 25%+ share, grabbing traction within the news genre to garner viewership share, and, consequently market share. Among English news channels, India Today Television slipped to the fourth spot with a 12% viewership share, down 200bp MoM, for the second consecutive month, within the genre

Within the regional GEC genre, impressions for the Tamil genre grew 17% MoM, as viewership impressions grew sharply with announcement of lockdown extension and continued work from home for a majority of households. On the other hand, Telugu genre impressions grew 35% MoM and Kannada gained 27% MoM

Within the Hindi GEC (urban+rural) genre, impressions count were up 17% MoM while in case of individual Hindi GEC (urban) & (rural) genres, it grew 11% MoM and 20% MoM, respectively. Other genres like Hindi movies too reported an improvement in impressions count by 6% MoM. In case of Marathi viewership, impressions increased 47% MoM on the resumption of new episodes for GEC channels. Impressions within the Hindi news genre grew 2% MoM, due to high base of last month, after a sharp surge in impressions in the past month, due to PM announcements and continued news flow on COVID-19 updates.

Our view

We believe TV ad revenue will decline 20-25% YoY in FY21E (we had highlighted in our report on 27 April, Why TV’s viral boost is a brief antidote, We have already witnessed a sharp bounce-back in impressions and traction toward GEC, backed by the return of new programming in July; we expect this to surge as more fiction shows get re-launched in the near term coupled with large non-fiction properties, which too are a large driver for eyeballs. Another positive trigger for GEC has been the movement of large channels like Zee Anmol moving back to FTA vs earlier on pay basis post the announcement of NTO last year; Dangal TV, which was the leader in FTA in the recent past, will see stiff competition from the re-entry of these FTA channels. In the regional genre, SUNTV has maintained its healthy viewership share on the back of absence of non-fiction content in which Star Vijay and Zee Tamil have a strong presence; the start of non-fiction properties may negatively affect Sun TV viewership share in the near term

We believe TV consumption, which has come off from a growth factor of 43% during the peak of lockdown (second week of April) toward 15% until last week, may not see a big dip in the upcoming weeks as people step out of home only in case of essential work; this will continue to drive time spent for TV medium as people avoid social gatherings. IPL 2020, which is to be held in September, announced last week it will see a big shift in viewership share as it remains the only large sporting event for CY20, with T20 World Cup being postponed. Our channel checks indicate a number of large advertisers may hold back spending on GEC (non-fiction specifically) to save and spend on IPL; given a similar target group audience, some portion of news ad spend too may move away to IPL during the two months of the tournament

The recent announcement by TRAI enforcing broadcasters to publish RIO prices in August was a negative surprise as broadcasters are already hit with the decline in ad revenue; disruption in viewership share, due to NTO implementation will further add to their woes and may affect ad growth negatively. The NTO 2.0 will enhance select viewing for consumers as a la carte prices get slashed and the discounting factor on bouquet prices too get capped. Our channel checks with distributors indicate subscription revenue saw a surge of 12% YoY during the peak of lockdown in April; however, this has converged toward a mere 3-4% YoY growth, due to 1) the Unlock mode initiated from June, 2) a lot of commercial offerings (restaurants, bars, hotels and retail shops) have cut the cord temporarily due to remaining shut or poor occupancy. We have currently factored in a growth of 5% YoY in subscription revenue for broadcasters (ex-Tamil, which is higher as the State further moves toward digital cable); we believe implementation of the NTO 2.0 will lead…to a decline of at least 10-12% for broadcaster subscription revenue, due to price cuts on a la carte channels and selective viewing

We retain our negative stance on broadcasters in the long term, given structural risks, such as 1) disruption on TV channel monetization in digital, 2) Jio pushing its TV offerings free of cost to its subscribers, 3) implementation of NTO 2.0, 4) threat from global OTT offerings, and 5) headwinds on the margin front on the back of investments in content. However, TV is the only traditional medium of media, which has been able to sustain its share in the ad expense market and this should sustain in the medium term; hence, some broadcasters will be value buys once potentially low valuation is breached

We recommend our Reduce rating on Z with a TP of lNR 158 based on 15x one-year forward P/E (factoring in the worst case scenario of the write-offs on the balance sheet). We recommend Accumulate on SUNTV with a TP of INR 450 based on 13.5x one-year forward P/E. We recommend our Buy rating on TVTN with a TP of lNR 290 based on 10.5x one-year forward P/E.

The author is the Vice President of Elara Capital

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of

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