TV ad revenue marches ahead of print: Credit Suisse

NEW DELHI: The Indian television market has been steadily eating into the advertising revenue and has sliced off a significant chunk from the traditional advertisement giant, newspapers and this is likely to grow, but for a one per cent slump expected in 2008, says the Credit Suisse report, "Opportunities of Hollywood in Bollywood."

And a large share of the advertisement revenue for TV will be shared by the top two, with Star and Zee dominating, and the former expecting to make up on recent slump because of their blockbuster game show KBC (Kaun Banega Crorepati) being off the channel for sometime now. The pick-up is also likely to be because of KBC returning on the channel.

The report says that the advertisement market share of newspapers in 1994 was 61 per cent, while that of TV was 30 per cent.

That scaled up for TV to 43 per cent over the next five years (2004), while newspapers slumped to 49 per cent.
The current year's figures for newspapers and TV are 42 and 44 per cent respectively, but while the former has stayed at 42 per cent since 2004, TV has improved one per cent over the figures for the same period.
Interestingly, Credit Suisse predicts that while newspapers will retain their market share at 42 per cent in 2008, TV shall lose one per cent of the share for the same period.

The top 10 advertisers on TV are Hindustan Lever, Paras Pharmaceuticals, Proctor&Gamble, Radio Benckiser (India) Ltd, Dabur India Ltd, Johnson & Johnson, Pepsico, Nokia Corp., L'Oreal India Pvt Ltd and Colgate Palmolive. While the FMCG sector has remained the largest contributor of advertising revenue, the report sees a certain change coming up with telecom, auto and financial (credit cards, mutual funds) companies becoming good players in the market. And Credit Suisse expects that with the lowering of barriers for foreign companies to enter the retail market, packaged food items (which have already started making a mark) are likely to contribute a bit more than it does now.

The report says that Star TV is the leading broadcaster, with the largest distribution of all cable networks, having a footprint of 44 million households. It gets paid for 10 million households, though, due to underdeclaration by cable operators. But this is still double the amount that other broadcasters get paid for, says the report.

"In FY07E to date, Star has suffered for not having Millionaire (KBC)…Q2 of FY07E is expected to have the added difficulty of Champions Trophy Cricket taking revenue out of the market," the report predicts. Adding, "Easier comps are predicted for H2 when Millionaire is likely to return to the schedule. However, the difficult comparisons of H1 are likely to slow advertising revenue in FY07F growth rates versus FY06 growth rates."
Zee Telefilms' domestic serials is giving some competition to Star, but its market position "remains exceptionally strong, with double the gross ratings points that of Zee and four times that of Sony.

While Star's future programming is likely to revolve around regional channels, rival Zee - the largest listed media company in the country - will be there too and for the same reason: that is where the most rapid growth is expected in terms of households, and already, that is where a third of the TV ad pie goes: local language channels.

Interestingly, Star is already there with Star Vijay and Star Ananda, Telugu and Bengali channels already doing well.

Disney has cornered the best of the kiddies segment in Hindi, and is strategically increasing its locally produced content. During vacations, its locally produced content peaks to about 25 to 30 hours out of the 168-hour week, while during school periods it goes down to 12 to 13 hours. It has leadership (50 per cent) in the kids space, says the report.

Sahara One is the fourth player in the TV market after Star, Zee and SET. Times of India owns six per cent of shares and Siva owns 14.9 per cent. However, it is being reportedly eyed by Viacom and the management is interested to dilute the 51 per cent ownership. It is set to launch six new programmes as part of a revamp, but none of its programmes happen to be in the top 100.

SET (61 per cent Sony Pictures, 31 per cent Indian shareholders and eight per cent Capital Group), is likely to see some changes in the ownership pattern as well, "to provide for an exit option for the Indian shareholders" and this is likely in the form of IPO, the Credit Suisse report suggests.

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