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Hindi GECs open the door to higher ad rates

MUMBAI: Choking inventory supply, the Hindi general entertainment channels have been able to open the door to higher advertising rates. But though advertisers have opened their wallets to the broadcasters, the cut in ad time has not run in proportion to the hike in rates. The lower performing channels have obviously been hurt more.

The good thing is that the supply-chain dynamics is changing fast. For years, entertainment broadcasters were butting heads with media agencies over advertising rates and were on most occasions on the losing side. When TRAI came up with the 12-minute ad cap regulation, the major networks sniffed an opportunity of bettering the trading value of their commercial airtime. They united and decided to get rid of excess supply of ad inventory. Falling on the other line of the divide were the majority of broadcasters who felt that their revenues would be badly mauled.

Being the largest mass entertainment genre, Hindi GECs decided to uncover airtime across time zones. First to shave off ad inventory were the trio of Star India, Zee Entertainment Enterprises Ltd (ZEEL) and Viacom18. After a brief resistance, Multi Screen Media (MSM) followed suit from 1 January 2014.

A quick glance at TAM AdEX data provided by the industry will show how broadcasters have progressively trimmed their ad inventory in the September quarter to 16 minutes per hour.

hindi gec 01

As is evident from the table above, the major Hindi GECs (top 6 channels) complied with the 16-minute ad cap during the quarter. However, none of the major GECs (top 6 channels) had the right-sized haircut capping their ad time to 12 minutes in the beginning of October.

Star Plus, Life OK, Zee TV and Colors are following a 12+2 norm (12 minutes of commercial time and two minutes of self-promotion) rather than the prescribed 10+2 regulation (10 minutes of commercial time and two minutes of self-promotion). For the quarter beginning October, the MSM channels (Sony Entertainment Television and SAB) have an overrun by 3–4 minutes during primetime. However, since January, the MSM twain have also started following the genre norm of 12+2 minutes.

If we analyse the average ad duration per hour vis-à-vis the full-day period, all major GECs followed the 16-minute ad cap during the quarter ended September 2013. Even in the following quarter (when the ad cap was implemented), all major GECs (excluding Life OK and Sony TV) across the day fell in line with the 12-minute diktat. In the month of January 2014, Sony also started following the 12-minute ad ceiling (over the 24-hour period). Life OK, however, continued to sell inventory upwards of 12 minutes (at 13.6 minutes per hour average in the month of January 2014).

hindi gec 02

So, how much will the discipline cost the Hindi GECs? Mapping out the average ad inventory consumption for FY13, we have worked out a rate hike which the GECs will have to impose to mitigate any revenue loss.

Star Plus and Colors are recommended to get hikes of 38 per cent and 25 per cent respectively to guard their old revenues while Zee TV and SET will need to up their ad rates by 12–14 per cent.

hindi gec 03

So, how have the channels been impacted? Digging into the financial figures of the listed entertainment broadcasters, we have found that ZEEL has been insular to the ad time haircut while Sun TV Network has been negatively impacted. We are looking at regional-language broadcaster Sun TV Network to understand how the impact will be on regional GECs as well.

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