Sports to see degrowth in ad revenue: Joy

MUMBAI: Sports will see a degrowth in advertising revenue while Hindi general entertainment channels (GECs) will lose their pricing power this fiscal, said Zee Entertainment Enterprises Limited (Zeel) executive director revenue and niche channels Joy Chakraborthy.

Television will, however, grow faster at 12 per cent while print will crawl at 2-3 per cent as advertisers exercise caution in spending.

"Sports revenue will be under attack because of India‘s debacle against England. The cricket World Cup revenues were also captured in the last fiscal," said Chakraborthy in an interview.

Sports broadcasters earned a combined ad revenue of Rs 15 billion in FY‘11, buoyed by the World Cup and the Indian Premier League (IPL).

"The India-West Indies series was affected as some of India‘s stars were not playing. The England series has been a setback. Seeing the performance of the Indian team, the Champions League Twenty20 is obviously facing the music," said Chakraborthy.

The Hindi GECs will see growth but there will be redeployment of ad monies among the top four. "In a four-horse race, the pricing power will be somewhat muted and there will be revenue fragmentation. Media agencies will be in a better bargaining position," averred Chakraborthy.

When queried about a possible ad slowdown, Chakraborthy admitted that advertisers have become "more cautious" and are entering into quarterly and shorter term deals.

"Not too many annual deals are happening. But India being an emotional country, a single strong wave can lead to a turnaround."

How deep will the ad economy be hit with FMCGs hinting at slashing their promotional budgets? "There is a concern but at the same time many of the FMCG companies are launching variants. If HUL states that it is slashing its ad budget, frankly speaking it is no more a scare. But what could be disturbing is that we are seeing a drop in high-yielding inventories filled by telecom, banking and finance and real estate companies. We are hoping that like telecom which came in a big way a few years back, we will see a new category emerge," said Chakraborthy.

The biggest problem in the television industry is that fragmentation is peaking. "A slowdown is good in a way as it will ensure that networks with sustaining power will gain. Costs will also get corrected as companies try to protect their bottom lines," said Chakraborthy.

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