New Delhi: TV channels are likely to see a dip in their advertising and subscription revenue in the March quarter of 2018-19 owing to the transition of the industry to the new tariff regime as well as broadcasters withdrawing their channels from DD Free Dish on 1 March.
In its latest report on the media sector, financial services company Edelweiss Securities Ltd said that the broadcasting industry will see its revenue decline as a result of the issues cropping up owing to the implementation of the new tariff order proposed by the Telecom Regulatory Authority of India (Trai) that allows consumers to choose the TV channels they want to watch and pay for.
With television monitoring agency BARC (Broadcast Audience Research Council) as well as the Indian Society of Advertisers (ISA) advising broadcasters and advertisers to disregard viewership data in the transition period, TV ad revenues are expected to come under pressure. The broadcasters deciding to withdraw their channels from the free-to-air (FTA) direct-to-home (DTH) platform DD Free Dish would only complicate matters, the report said.
BARC had emphasized that it will take about six weeks before viewership data under the new regulation becomes measurable. Limited clarity on subscription and blackouts happening in certain pockets of the country should impact ad rates charged by broadcasters this quarter, along with presenting an opportunity for advertisers to assert their bargaining power, the report said. According to Abneesh Roy, senior vice president (Research) at Edelweiss Capital Ltd, “Viewership will definitely get affected and there is no BARC data to support, many channels may face either lower ad rates or volume."
However, once the transition is over, ad volumes and rates are expected to return to normalcy, the report added.
Further, the report said it is difficult to ascertain the impact of the regulation on broadcasters’ subscription revenue given the multiple deadline extensions by Trai. Besides, distributors are pushing their own packs, and there is much confusion around their contracts with broadcasters with many platforms not including key channels of certain broadcasters in their base packages.
Also, leading broadcasters have collectively decided to leave DD’s Free Dish platform, which constitutes 15–16% of the TV universe in India covering 30 million households. While this would impact broadcasters’ ad revenues in the near term with effects lingering over the medium term, the report said the move presents an opportunity for broadcasters’ to convert Free Dish users into paid TV subscribers in the long run. Currently, broadcasters earn only advertisement revenue from the Free Dish platform; however, in the longer term, this could lead to broadcasters generating both advertisement and subscription revenues from erstwhile Free Dish customers.
However, given that most advertising deals are done on long-term basis, some ad industry experts are bullish on TV advertising in the coming months. “I see an overall growth in television advertising this year given that we have the World Cup, IPL and general elections. The period up to March is only meant for rollover and any impact will be minor and restricted to a few players," said Ashish Bhasin, chairman and chief executive, South Asia, Dentsu Aegis Network.
Broadcast platforms are hopeful too.
“With Trai extending the deadline for seamless transition (of the new regulation) till the end of March, after being concerned and skeptical initially, advertisers have come around and reinstated their campaigns," said Ashish Sehgal, chief growth officer, advertisement revenue, ZEEL. "Therefore from a revenue standpoint, we look comfortably placed to achieve our desired numbers as TV undoubtedly is the medium with maximum reach in our country. Hence I feel the March quarter would see a positive uptrend for both the industry and Zee."
On the withdrawal of channels from DD Free Dish, Sehgal said ZEEL has bundled its channels keeping consumers preferences in mind.
"This will also help the medium to garner the right value it deserves," Sehgal said.