Sun TV Network cautious about FY20 growth expectation due to economic slowdown

The Marathi channel launch has been put on hold.

MUMBAI: The current slowdown in the Indian economy has stunned the expected growth of major companies, and media conglomerates are not an exception. South India’s largest broadcaster Sun TV Network is being cautious about the growth expectation for the rest of the year especially due to a headwind in the advertising sector. Due to this, the Marathi channel launch has been put on hold.

“We are seeing a lot of deceleration in sectors like auto and real estate and because of that, there is some multiplier effect which is pulling down the momentum in the economy. So, if you look at all the numbers that have come out from FMCG companies, barring some notable exceptions, like Asian Paints, everybody is painting a very down outlook. So, in that context, we shouldn't expect anything spectacular for the remaining calendar year at least. People are saying that if the monsoons are good, things will pick up because of better spending power coming into the rural economy. But all that is still a guesstimate,”  Sun TV Network group CFO SL Narayanan commented in an earnings call with analysts after the 1st quarter of FY 20.

Explaining the current situation, he noted that the outlook for advertising this year is pretty challenging. Narayanan also added that the company is unable to give any guidance on advertising as well and need to set expectations very reasonably. According to him, even ending up with a mid-single-digit growth would be lucky this year.

For the first quarter of FY 2020, advertisement revenues stood at Rs 368 crore, broadcast at Rs 10 crore, international subscriptions around Rs 41 crore, revenue from pay channels including digital was about Rs 169 crore and DTH Rs 228 crore. Along with these segments, movie production helped to garner around Rs 41 crore and IPL Rs 244 crore.

Along with the slowdown in the national market, the situation in Tamil Nadu’s regional market has not also been very rosy. The spending of local and regional advertisers has also shrunk because of a lack of liquidity in the system. Narayanan also added that people are not seeing any ROI in advertising.

“We have seen 2-3 per cent growth in the market share which we have gained over the past couple of weeks. So, our endeavour is to further keep growing the market share. And ultimately, it leads to the level where we were a couple of years back. So, I think the desire is to go to 50 per cent and we are working towards it,” Narayanan commented on Tamil Nadu market share expectations.

Sun TV Network MD R Mahesh Kumar also added that some of the competitors are losing substantial share in the Tamil Nadu market. However, a series of launches happening in the market is making them confident about  gain in further market share eventually leading to better monetisation. He also added optimistically that the company will also improve the revenues accordingly.

While the broadcaster forayed into the Bangla market at a time when the new tariff order changed the entire scenario, it left an impact on the newly launched Sun Bangla as well. Sun TV's CFO is still optimistic about the revenue of its Bangla GEC. He also added that the channel needs to be given some time as it launched only five months back. According to him,  the company’s strategy to venture into Bangla market is a well thought out expansion strategy.

“I think it’s a step in the right direction because we think that there is a lot of potential there. It is a market where there is not much of TRPs available for trading and there are 2 well-entrenched competitors. And I think that our content strategy also has been very well thought. All those series have been very well made, slickly made. But it will take some time. Rome wasn’t built in a day. And so we are doing all the right things. And I’m sure we will see an uptick pretty soon,” Narayan explained.

“I don’t think we can sit back and say that we shouldn’t have done this. We’ve actually applied a lot of thought and we identified that this is the place to go because to go into the regular Hindi market would have called for enormous amounts of capital. So even assuming but not admitting at some stage this [Sun Bangla] turns out to be a damp squib, it is not something that will wreck the balance sheet of Sun TV,” Narayanan added.

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