The worse is behind the broadcasting space as it bounces back
Starting with demonetization to implementation of GST, followed by a time-crunched festive season, it's been a roller-coaster for broadcasting space which is now making a slow comeback
2017 has been no less than a roller coaster for the media and entertainment space. The same applies to broadcasting industry which battled the demonetization blues head on starting from last November when it de-grew as much as 21 per cent compared to last year losing an estimated Rs. 850 crore. As things started looking up from April onwards, it was struck by another economic hurdle GST. Despite its transitory impact, the broadcasting space saw a drop of 20–25 per cent in ad revenue in July as June saw postponement in advertising spends. Having said that, the industry is on a revival mode with experts expecting a positive first quarter in 2018.
MK Anand, MD and CEO, Times Network explained the scenario in a nutshell, “Business has slowed down from earlier growth rates which were high. Advertising in broadcast specifically have been growing by 12 or 13 per cent. I think the whole year would have just scraped at zero plus/ minus a little bit. In the last six months (post GST,) there is a contraction. When you look at the Broadcast adex the drop is evident. It has sandbagged a little by an increase in low price volume from FTA GECs, Hindi movies, etc. If you take that out, the drop would be a little more than 1-2 per cent.”
He further pointed out that the headwinds of demonetisation and GST have been harsher on English business comparatively. “If Hindi GECs in the last six months have dropped by 2-3 per cent, English has dropped by about 5 per cent,” he said.
Though the industry was prepared for the new economic regime, it didn’t expect GST to be a bigger blow than demonetization. Joy Chakraborthy, President – Revenue, TV18 and CEO, Forbes India, added, “The launch of GST came with a new regime so a lot of wait and watch happened, followed by its own teething problems, changes in GST slabs, its process, etc. which in a way took away from the recovery of demonetization.”
He further mentioned the absence of government advertising. “Also, the absence of government advertising has been something due to DAVP deadlock, which kept broadcasters waiting given that GST was already kind of limiting,” he said.
In fact, Pitch Madison Report 2017 mentioned that television grew by 9 per cent to Rs. 18,831 crore and predicted that it will reach Rs. 21,296 crore in 2017. Publicis Groupe-run media agency Zenith forecasted a similar growth rate. Meanwhile GroupM’s 'This Year Next Year' (TYNY) report is expecting 8 per cent this year which is attributed to ‘Free To Air’ channels adding more inventory and 'pure HD' content gaining ground. The report also anticipated consolidation of niche channels. It matched the estimates of Pawan Jailkhani, Chief Revenue Officer, 9X Media. “TV is also in single digit. FMCG didn't show much traction. Icing on the cake were always categories like automobile, retail and finance,” he said.
Anand also noticed a phenomenal growth in the HD space, especially in English, in spite of demonetisation and GST. He said, “The growth is in excess of 50 per cent.”
GST seeping into festive mood
The sales of top FMCG players like Hindustan Unilever, Dabur, Marico and Emami were impacted by de-stocking ahead of GST implementation which in-turn affected the ad spends of broadcasters. To top it all, this seeped into the time crunched festive season to an extent. It condensed from six-eight weeks in previous years to four weeks this year.
For instance, ZEEL had mentioned that its advertisers were negatively impacted during transition which led to a temporary pull-back on their ad spends for the quarter ending 30 September, 2017. The network registered a Rs. 986.7 crore, a YoY growth of 2.9 per cent from Rs. 959.2 crore in the same quarter last year.
Mohan Nair, CEO at Mathrubhumi TV, mentioned that GST came in the way of channels achieving their targets during festive period. “On the regional front, the spenders were retail jewellers and retail consumer appliances dealers,” he said.
Despite all the obstacles, the broadcasting industry fetched impressive numbers during festive seasons. The four major Hindi GECs like Colors, Star Plus, SET and Zee registered revenues in the range of Rs. 1500-1700 crore between Navratri and Diwali, according to media reports, with Star and Colors reportedly clocking an increase of 20 per cent over previous festive months. Meanwhile SPN recorded more than that.
Smaller players like 9XM and SAB Group saw a similar growth rate of 9-10 per cent and 15 per cent growth respectively this Diwali over last year.
Festive season witnessed lot of action from FMCG players, automobiles, consumer durables, jewellery and retail. E-commerce majors have increased TV ad spends by nearly 40 per cent this year. Automobile was pretty active with 50 per cent and a 160 per cent jump in ad spots was seen by four wheelers and two-wheelers, according to media reports.
Paytm stole the show as it allocated Rs. 1000 crore for festive sales while ecommerce majors Flipkart and Amazon have collectively spent nearly Rs. 100 crore for promotions through television advertisements for their September sales.
Rise of FTA channels
The year saw the rise of Free-to-Air (FTA) channels. In some cases, it led viewership across genres like Hindi GEC and sports according to BARC. This definitely brought advertisers close to a fresh set of audience. “The accessibility of media with Free to Air channels and almost free data today lets marketers have access to this completely new set of consumers/markets who were earlier very difficult to reach,” said Shekhar Banerjee, Chief Operating Officer, Madison Media. According to estimates by the FICCI - KPMG Media and Entertainment Industry Report 2017, advertisers were expected to double their spends on FTA channels in 2017. “The FTA channels garnered an estimated Rs. 400-500 crore of the overall TV advertising pie in 2016; which is expected to rise to Rs. 800-1000 crore in 2017,” the report said.
Upbeat about 2018
The broadcasting industry is optimistic about a stable 2018 as there will be eight state elections which will improve sentiments and (hopefully) bring in advertising revenue. The industry is already showing signs of revival with November-December posting 10-11 per cent growth according to Jailkhani.
For Anand, the silver lining of 2017 is that from November 15 onwards there is ‘almost a distinct change in behaviour.’ He shared, “From our point of view daily booking, publishing and burn have been a hockey stick. December is substantially better, It’s on par with the months of January to May. If I was to keep that as a benchmark then turnaround is already happening.” He put industry numbers at 15-20 per cent for November and December vis-a-vis last November and December. “It is because of demonetisation drop last year. But vis-a-vis 2015 it may be on par,” he said. So, it’s a wait and watch on how the next two quarters will turn out.
Jailkhani sees the economy opening up and GST settling down. “Next two quarters have to do extremely well. I see a positive impact in the first quarter at least. Also, with elections in 2018, the overall sentiment will change,” he said.
From sports’ perspective, Akshaya Kolhe, Director – Head of Sales for ESPN, South Asia said that 2018 will continue seeing sports play a crucial role for marketers to connect with people. He shared, “It starts with India’s cricket tour to South Africa, followed by two big events with the 11th season of IPL and FIFA World Cup which will be a big focus for marketers during the year. Apart from these, a multi-sport landscape continues to grow with Grand-slams, international football and home-grown leagues,” he said.
Jailkhani signed off by saying “The worse is already behind us.”
With inputs from Venkata Susmita Biswas and Akshata Murthy
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