Subscription helps broadcasters offset shrinking ad revenue

Subscription helps broadcasters offset shrinking ad revenue
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First Published: Mon, Jul 27 2009. 10 47 PM IST
Updated: Mon, Jul 27 2009. 10 47 PM IST
Mumbai: India’s broadcasting firms are set to benefit from a lucky shift to a subscription-based model as they slug it out with media peers for a shrinking advertising pie in a highly competitive market, industry watchers said.
Also, increased competition among direct-to-home (DTH) operators and the proposed entry of more companies provide broadcasters new revenue opportunities without incremental cost, they added.
Zee Entertainment Enterprises Ltd saw subscription revenue from domestic DTH rise 88% in April-June from a year ago while advertising revenue fell 29%. New Delhi Television Ltd (NDTV) saw DTH revenue rise by a quarter in the period.
DTH “will help in offsetting the impact of the slowdown in advertising revenue”, NDTV, which runs and operates English news channels NDTV Profit and NDTV 24X7, said in an emailed response.
Broadcasters took a hit in earnings since late last year as the global economic slowdown prompted key advertisers—retail, real estate and auto—to cut expenditure.
The general election, which took place in April and May, and the popular Twenty 20 cricket series also saw general entertainment channels scrambling for advertisements.
However, broadcasters, who started seriously exploiting opportunities in subscription model since 2006, are predicting an exponential growth in revenue from DTH, which has a mere 10% share in India.
“As we expect a significant jump in this share in the coming years, more players are entering the DTH market,” said Rohit Maheshwari, analyst with KR Choksey Shares and Securities Pvt. Ltd.
The total number of DTH subscribers in India is expected to cross 20 million by 2010 from at least 13 million in March, estimates Neha Gupta, senior analyst at Gartner Inc.
Besides the existing players such as Sun Direct DTH Service, Tata Sky Ltd, Dish TV India Ltd, Reliance Communications Ltd’s Big TV and Airtel DTH of Bharti Airtel Ltd, Videocon group has also expressed interest in entering the DTH market.
Under-reporting of subscribers by cable operators has been hurting broadcasters, whereas DTH has no such constraints, thus helping generate a larger share of revenue from subscription, said Salil Kapoor, chief operating officer, Dish TV.
“Over the next few years, our business model would undergo a shift in favour of a subscription-led model, as is the case globally,” said Subhash Chandra, chairman, Zee Entertainment Enterprises Ltd, after it announced its quarterly results this month.
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First Published: Mon, Jul 27 2009. 10 47 PM IST