‘There is now no weakling Hindi GEC in the ZEEL stable’
Zee Entertainment Enterprises Ltd (ZEEL), which saw its ad revenue soften in FY17 due to demonetisation, expects to post strong growth in the current fiscal.
Regional channels, the free-to-air (FTA) genre and Hindi general entertainment channels (GECs) will fuel ZEEL’s ad revenue growth in FY18, says Zee Unimedia COO Ashish Sehgal.
While the Hindi GEC FTA channels could see a rise in ad rates after squeezing in inventory last year, there is scope for non-pay channels in the Hindi movie genre to expand inventory.
The revenue growth in the Hindi GEC genre will depend on the performance of Zee TV, &TV and Zindagi.
In an interview with TelevisionPost.com’s Sibabrata Das, Sehgal also talks about demonetisation, the fall in GRPs of mainline Hindi GECs, and the growing importance of the southern-language market.
Q. Will ZEEL see a stronger ad revenue growth in FY18 than in the previous fiscal year, or the dark clouds formed by demonetisation are still hovering around?
The ad climate has definitely improved in the current financial year after being badly impacted by demonetisation in the last two quarters of FY17.
There are three things that will fuel ZEEL’s ad revenue growth in FY18. We expect to see good growth from our southern regional channels led by the Tamil GEC, where we have seen viewership market share increase. In the Telugu GEC market, we are already a strong player.
The second trigger point will be the free-to-air (FTA) channel genre.
The third growth area, of course, will be in the Hindi GEC genre. To some extent, this will depend on the performance of Zee TV, &TV and Zindagi.
Q. Flagship Hindi GEC Zee TV’s viewership share seems to have fallen. How big an impact has this been in FY17?
Ideally, Zee TV should have grown faster in FY17 than how it did, because rural data started being covered by rating agency BARC. But there were issues surrounding the performance of the channel. We are correcting that.
Overall, the Hindi GEC genre has seen a fall in GRPs. This has impacted all the mainline Hindi GECs across networks. The movie genre, in contrast, has gained in the BARC scenario and there has been a growth in their GRPs. So, the movie genre, which had fallen in the last couple of years, is growing at 20%.
|‘Overall, the Hindi GEC genre has seen a fall in GRPs. This has impacted all the mainline Hindi GECs. The movie genre, in contrast, has gained in the BARC scenario and there has been a growth in their GRPs. So, the movie genre, which had fallen in the last couple of years, is growing at 20%’|
Q. So, how big an impact demonetisation was and what strategy did ZEEL adopt to neutralise the impact?
We changed our strategy. We offered bonuses to clients on a short-term basis but did not reduce our ad rates. So, when the demonetisation impact smoothened out, we withdrew the bonuses and could protect our rates. Some networks stuck to their prices despite finding no takers and so de-grew during the two quarters through March.
While we posted ad revenue growth of just below a double-digit figure for the full fiscal year, some networks actually saw a de-growth in their ad revenues. The situation was really tough in the last two quarters of FY17.
Q. Will the FTA genre double in FY18 due to increase in ad rates?
The FTA genre should at least see a 30% revenue growth this fiscal year, mainly due to an increase in ad rates. The Hindi GEC FTA channels consumed inventory last year, and this financial year there should be a rise in ad rates. In any case, the FTA channels are much cheaper priced than the pay GECs.
While the Hindi GECs should be able to push ad rates up, the FTA channels in the Hindi movie genre have scope to expand inventory.
Q. In FY16, ZEEL posted 29% ad revenue growth over the prior-year period. What apart from demonetisation led to the slowdown in ad revenue growth in FY17?
We were speeding well in FY17 till demonetisation came in November. In FY16, there was an overall growth in the television ad pie because of various categories firing. There was a price increase factor as well. Though it wasn’t easy because no one was referring to viewership data, it still was easier to come to an agreement on a certain price point.
Price increase in FY17 has been difficult. However, new inventory has been created through channel launches to act as a kind of cushion. But in the last two quarters of the fiscal year, demonetisation impacted the TV ad sector in a big way.
Q. BARC data is showing more fragmentation in viewership trends. Is this also impacting the TV ad growth?
Fragmentation will always continue and, in a sense, it is good because that sharpens the viewership and an advertiser gets to know where exactly the money is being put. At the same time, the job becomes all the more difficult as more data needs to be churned. Owing to fragmentation, broadcasters may get a leeway to command a premium on those channels where viewership is high.
|‘The Hindi GEC FTA channels consumed inventory last year, and this financial year there should be a raise in ad rates. The FTA channels in the Hindi movie genre have scope to expand inventory’|
Q. Is &TV still struggling so far as revenue goes or the channel has gone out of that phase? Did ad revenue of the channel touch Rs 300 crore in FY17?
In markets like Uttar Pradesh, Madhya Pradesh, Delhi, Mumbai and Punjab, &TV is doing pretty well and is ahead of many mainline Hindi GECs. Yes, there is a problem regarding reach, but since a couple of shows are very popular, the demand for the channel is pretty high in certain markets. Like Sab TV, the channel has brought in differentiation.
The content hours on &TV are lower and so are its expenses. As the content hours get stretched, ad revenues will expand.
Q. So in the ZEEL stable which is the weakling Hindi GEC right now?
There is no weakling Hindi GEC anymore. I don’t know about the profitability of &TV, but it surely is a growth driver from the top line perspective.
Zindagi was relaunched last year and there is a fresh perspective that the channel is all about world content. The earlier positioning of Zindagi was that it would be a channel primarily driven by Pakistani content. Zindagi targets premium audience and advertisers see value in that.
Q. Zindagi’s ad revenue according to media agency estimates is around Rs 70 crore. Will the channel touch Rs 100 crore one year after its relaunch?
I can’t comment on revenues of individual channels.
Q. ZEEL seems to have cracked the southern market. How big growth engines are these?
More growth has come in the southern market after BARC started reporting rural data.
We were struggling in the Tamil market, but that seems to be of the past. We are seeing exponential viewership growth in that market. In fact, Zee Tamil will be the main anchor for growth among the regional channels this year and going into the next year as well. With market leader Sun TV recently increasing ad rates in Tamil Nadu, there is room for other Tamil GECs to collect more from the market.
We are also growing in the Telugu and Kannada markets. We have started buying movies also, which we could do after reaching a particular level of GRPs. The strategy is to buy mid-budget movies which do well on TV.
Q. Estimates are that Zee Telugu earned ad revenue of Rs 250 crore in FY17. How strong is the growth in this market?
Despite Sun TV Network’s Gemini consolidating, Telugu is a three-horse market with us and Maa TV being the other strong contenders. ETV is also a strong channel. Thus, there are four mainline Telugu GECs and they all have over 400 GRPs each. There are enough GRPs in that market to accommodate fragmentation. There is scope for new channels to launch there. Our new Telugu movie channel, Zee Cinemalu, has already crossed 100 GRPs.
|‘More growth has come in the southern market after BARC started reporting rural data. We are seeing exponential viewership growth in the Tamil market. In fact, Zee Tamil will be the main anchor for growth among the regional channels this year and going into the next year as well’|
Q. Is Kannada a much smaller market? Will Zee Kannada be earning less than Rs 100 crore a year?
Whatever it was in FY16, we have almost doubled the ad revenue of Zee Kannada in FY17.
Q. Marathi and Bangla are more mature markets for ZEEL. So, is growth slowing down in these markets?
Marathi is not growing at the same pace as maybe Bangla, but there is still a lot of money to be made in these markets.
As leaders in the space with Zee Marathi, we decided to launch a second Marathi GEC called Zee Yuva to tap young audience. Generally, youth channels are not launched in regional languages but only in Hindi or English. This is the first regional market where our channel focus has been the youth. Youth does not necessarily mean only MTV and Channel V kind of channels.
The Marathi-speaking youth is upwardly mobile. Though the core target audience of the channel is youth, we also target the family audience. The content creation, however, is done keeping the youth in mind.
Q. Is Marathi a bigger market for ZEEL than Bengali?
After Hindi GEC Zee TV, Marathi and Bangla are almost of the same ad revenue size for us. Though we have more channels in Marathi, there is audience fragmentation due to the popularity of Hindi content in the state. Hindi entertainment content has a wider reach in Maharashtra than in Bengal.
The total Marathi TV ad market could be in the region of Rs 700 crore. Out of that, GEC would be the major revenue-earning genre. As we have a dominant viewership share, the onus was on us to expand the market by launching one more channel. We launched a youth GEC with futuristic content that is more palatable to youth.
Q. ZEEL has over 60% viewership share in Marathi while in Bangla it is much less. So how is ZEEL’s ad revenue from these two markets almost the same?
We have a large portion of non-fiction content in Bangla. This helps us to mop up more ad revenue. Besides, the two top-rated Bangla GECs have a very large share of the total ad revenue. Moreover, the penetration of Hindi content is less here. What this leads to is Bangla GECs having very large GRP figures.
Q. How strong is the growth in the FTA segment?
The FTA market has seen rapid ad revenue growth in 2016, opened up the rural markets for advertisers, and in 2016 could have reached Rs 550 crore outside of Doordarshan. The FTA genre saw ad rates rising to 1/5th of the pay GECs, from 1/10th at the start of 2016. It is growing at a rate of 25%.
My advice to broadcasters is that they should not launch too many FTA channels. The threat to subscription revenues is real. The onus lies with broadcasters collectively to ensure that pay channels remain relevant.