A glance at the latest quarterly results of some of India’s listed media and entertainment companies indicates, unsurprisingly, that advertising growth rates have slowed in the wake of an overall downturn in the global economy. NDTV, which has been metamorphosing from purely a news focus toward becoming a diversified global media player, incurred a net loss of US$24.4 million in the third quarter for fiscal year 2008-09. “The change in the external environment and the economic downturn has resulted in a visible slowdown in advertising revenues not just for NDTV, but for the industry as a whole,” stated the company, which has taken several new initiatives including new TV channels in NDTV Imagine (general entertainment) and NDTV Good Times under NDTV Lifestyle Company (lifestyle content). An established entity like Zee Entertainment Enterprises Limited (ZEEL) has witnessed a marginal slump in advertising revenues’ contribution to the overall revenue matrix of the group. In its third quarter fiscal (September-December 2008), ZEEL posted US$55 million in ad revenues, an increment of two percent over the same period last year. But overall contribution of ad revenues decreased from 51 percent to 49 percent. Subscription revenues definitely turned out to be a standout performer for ZEEL as it witnessed 17 percent growth during the quarter. With US$46.4 million, subscription revenues increased their contribution in ZEEL’s overall revenue from 38 percent to 42 percent on a comparable basis. Commenting on the results, Subhash Chandra, chairman, ZEEL said, “We are in the midst of a downward trend in advertisement revenues. However, this is being offset through a growth in subscription revenues, re-emphasising that the company is broad-based and less vulnerable to changes in advertising revenues.” According to Zee, lower growth percentage in advertising revenues in the third quarter is largely attributed to slow down in the macro economy which led to poor festival season spends by advertisers. Non-availability of original content for telecast on Zee TV due to striking of TV production crews in Mumbai in November 2008 also had an impact on the growth of advertising revenues. Up until only a few months back, it was still being estimated that TV advertising was growing at an annual rate of 15-18 percent. Signficantly, ZEEL still projects that advertising revenues for the current fiscal year are likely to register growth of 15 percent over last fiscal, whereas some specialists from media agencies expect it to slow further – judging by the sentiments of their clients, the ad spenders. The slowed growth rates follow rapid expansion in terms of new channel launches in India over the past few years. Overall, there are 450 television channels. In the last 12-15 months, 55 new channels have been added to TV, including four in the biggest genre, Hindi general entertainment category (GEC). And some of the new launches, including ones from the most promising ventures, are already feeling the pinch. For instance, INX News Pvt Ltd, the company which owns news channel NewsX, was recently sold to Indi Media Company Pvt. Ltd. On how the current economic scenario is continuing to put pressure on TV stations, Sudha Natrajan president and chief operating officer, Lintas Media Group told Television Asia Plus, “In relation to INX News, we have been observing that there has been a drop in advertising expenditure on news genre in the last quarter 2008 . Since the overall pie is shrinking, barring a few channels like Aaj Tak, India TV, CNBC Awaaz, and even on these channels, the growth seen in the first three quarters is considerably larger than what was seen in the last quarter, there is definitely a slowdown which has impacted their revenues. With realty, IT corporate/product advertising, auto, some sub-sectors in finance, getting affected, the impact on news channels revenues is bad, as they were consumers of advertising on news channels.” She added, “INX News seems to be going through a programming revamp of sorts, especially in their weekend programming. It will definitely be a challenge for them to grow revenues this year, but we need to see how their viewership behaves with the content revamp too.” New Delhi-based Smita Jha, associate director – entertainment & media practice, PricewaterhouseCoopers, says undisputedly, advertising revenues are under pressure for TV broadcasters owing to the global meltdown. “It is also correct that most broadcasters rely heavily on advertising revenues as compared to other sources of revenue such as subscription revenues,” she said. Tiring of formats According to Mediaedge:cia India Managing Director Shubha George, the recently released TAM data with the panel recalibrated to 2009 audience estimates shows that Cable & Satellite homes have grown to 83 percent of TV homes from 77 percent in urban India. “Naturally, the share of terrestrial Doordarshan has suffered. Interestingly, in the viewership habits of Digital homes vs Analog homes, because of the predominance of DD DTH until mid 2008, some FTA channels (such as Star Utsav, Zee Smile, Aajtak) that show modest performance overall do very well in these homes. With increasing private DTH this is likely to change,” she said. On viewership preferences/ trends, PwC’s Smita said while a lot of flurry was witnessed in the GEC space in 2008 with the entrance of three new Hindi GEC channels, what clearly emerged was the preference of new different content on TV. “Genres of reality shows when done differently clicked with audiences, mythology appeared as a new prime-time genre and even soaps with socialist themes have proved very successful on a GEC channel. Successful launches of TV channels in regional languages indicate a preference of audiences to view content in their own language – be it general entertainment or even news. This further accentuates the reality that though in aggregate there seems to be a large-number of TV channels, however, when one classifies them in various language-genre combinations, there are many boxes that may not be filled at all,” said Smita. On the other hand, Lintas’ Sudha said that while game shows were all the rage through 2008, channels are tiring of formats, and they have discovered that the cost of producing these shows might not get recovered in marketing them, with viewership being fairly low for many. “Peculiarly, while in other more developed markets, each new season of a show builds on its carry over loyal base of viewers from the earlier season, and we see a growth in viewership and interest, season to season; in India, if a format is working, with each succeeding season, we see viewership dropping. Hence, while costs escalate, the return on investment for advertisers is dropping. As 2008 witnessed so much of a boom in the first three quarters, there were enough advertisers in the market willing to pay top dollars for these high cost shows, but in 2009, a rationalisation will definitely set in. It is actually good, as channels were being made to pay unrealistic costs for content and talent. This should come down to levels that are more economically viable this year,” she said. Sudha also pointed out that top channels have also realised that by shifting focus from main-stay soaps to game shows, they lost out of a huge chunk of their loyal viewers in women. “Colors (new GEC from Viacom 18) launched in this cluttered space, but could quickly grow to be a lead channel with its differentiated content, both with respect to game shows – Big Boss and Khatron Ke Khiladi, and differentiated content in soaps which handle more basic, and social issues, like in Balika Vadhu, and cashing in on the resurgence of mythologicals – with Jai Shri Krishna. Not to mention the focus on building a strong distribution set up. Other channels like Star Plus and Zee are also going back to where they started and are attempting to woo back their women viewers with new soaps and other content for them. On the other hand, regional channels continue to do rather well, and we have seen some action in the launches of Star Jalsha and Star Pravah which are also performing well. In the Southern regional market Sun network continues to have higher viewership share. Kerala and Andhra Pradesh are getting fragmented, with there being 3-4 channels doing rather well,” said Sudha, who added that most of the performing channels are the pay channels. For her part, Shubha, referring to the launch of Colors, said what is driving viewer preference remains unchanged – content and accessibility. “Colors’ success proves this,” she said. “Dominance of cricket is not new to Indian TV; the consistent presence of India-England ODI (cricket) in Nov last year. Top programmes reiterates that GEC channels need a strategy for cricket days to garner audience and therefore advertising. And, in 2009 there are 30 percent + India cricketing days vis-a-vis 2009. What strategies entertainment channels adopt to counter this will be interesting.” Survival of the fittest On new advertising trends, especially the way TV viewing is expected to progress, Sudha said, “I feel that we would move towards being a more mature Television viewing market as well as revenue generating market. There would not be one top network, but 3-4 which would vie for the top slot. Each of them would own 1-2 programming formats that would be successful, hence during the launch of each succeeding season of their most popular show, that network/channel would be the top channel in terms of viewership and revenues. Instead of all channels continuously launching game shows through the year, this would get limited to 5-6 in a year, shared amongst 3-4 channels, that would be focussed and built upon. This would also bring down viewer fatigue. During the rest of the year, it would be big soaps that would bring about stability to television networks to bring in viewerships and revenues through the year, with these popular and winning formats (like Indian Idol on Sony), bringing in the spikes.” She concluded by saying, “It is going to be a survival of the fittest this year, with so much crowding in every genre space. Venture funding is coming under stress, and we have already seen it impacting networks that have launched in the last year or so. It will be a big challenge for them to weather out this year.” TVAplus