Chennai: India’s largest regional broadcaster, SunTV Network Ltd, reported a 16.83% rise in fiscal first-quarter net profit, shrugging aside the impact of an economic slowdown. Analysts credited the jump in profit to revenues it garnered from local advertisers.
The Chennai-based company, which operates channels in four southern languages, said on Wednesday that its net profit in the three months ended 30 June increased to Rs119.8 crore from Rs102.54 crore a year ago. Revenue rose 28.66% to Rs287.65 crore.
“During the slowdown in the economy, Sun’s results have been decent, and when the economy revives, Sun will have an edge,” said Rohit Maheshwari, an associate at KR Choksey Shares and Securities Pvt. Ltd, a Mumbai-based brokerage. “During the downturn, when companies are rationalizing costs, Sun has not got affected because it is concentrated on local advertisers to a large extent.”
Another analyst said Sun TV’s strong traction in the southern market and the resilience in its business model helped it “attract advertisers even in a period of slowdown”. He didn’t want to be named because he is not authorized to speak with the media.
Big picture: Sun TV chairman and managing director Kalanithi Maran.
But analysts are also watching the increasing competition for Sun TV in its southern stronghold, with News Corp.’s Star India Pvt. Ltd and Zee Entertainment Enterprises Ltd trying to dig deeper into the southern broadcasting market.
Three analysts said Star and Zee would have some impact on Sun TV’s channels in the four southern states—Tamil Nadu, Andhra Pradesh, Kerala and Karnataka—in terms of viewership and advertising revenue, though it would be a tough game for them.
“There will be an impact in the long run on its (Sun TV’s) viewership and, therefore, its advertising revenues due to the competition. But it is too early to quantify it (the impact),” said Maheshwari.
Sun TV’s strong points include a movie library of around 8,500 titles, its time-slot business model, and its own cable distribution arm, programming content and the political backing it has. The broadcaster is owned by Kalanithi Maran, grand nephew of Tamil Nadu chief minister M. Karunanidhi. K. Sriram, head of Vijay TV, the Star group’s Tamil channel, said the distance between Sun TV and other broadcasters in Tamil Nadu was an advantage.
“The distance is so big that it is a good opportunity for me to gain a lot of share from the leader itself. That’s an opportunity that we look at, saying how do we take a little bit of share from each of these players and make sure that we really become the No. 2 player...”
Sun TV has a bouquet of 22 channels in four languages—six in Tamil, seven in Telugu, two in Malayalam and seven in Kannada.
Star India has gained presence in all the four southern states after its joint venture firm Jupiter Entertainment Ventures Pvt. Ltd picked up an equity stake in Asianet Communications Ltd, which runs one Kannada channel (Suvarna), one Telugu channel (Sitara) and two in Malayalam (Asianet and Asianet Plus).
Zee News Ltd, part of the Essel Group, has a channel each in Andhra Pradesh (Zee Telugu), Tamil Nadu (Zee Tamizh) and Karnataka (Zee Kannada).
A person close to Sun TV agrees there will be more competition with the entry of Star and Zee, which have a dominant presence in the northern markets. “There will be competition. Possibly, if there is any issue where they (competitors) are trying to cover Sun TV’s ground, we will pull up our socks. Do you think Sun TV will be complacent?”
This person, who didn’t want to be named, said that in the Malayalam market, competition between Sun TV’s Surya TV and Asianet was “neck-and-neck” and Sun was working on regaining lost ground.
According to TAM Media Research Pvt. Ltd, the channel share for Sun TV’s flagship Tamil general entertainment channel slipped to 33.9% in April-June from 35.6% a year earlier.