Reach of ZEEL channels will return to normal in coming months: Punit Goenka
MUMBAI: Even as the implementation of the new tariff order (NTO) has impacted the reach of TV channels of most pay broadcasters, media conglomerate ZEEL’s CEO Punit Goenka expects the situation to return to normal in the coming months.
Goenka said that the TV broadcasting industry has seen a drop of 4-6% reach in different genres. ZEEL’s Hindi genre channel witnessed a slightly higher drop in reach. However, he is confident that the correction will happen in the coming months.
“As an industry, the reach drop has been about 4-6 percent (point), different for different genres. For us, in the Hindi genre, we have seen slightly more than the industry drop. But we are confident that in the coming months we will recover this and therefore things should go back to normal,” Goenka told analysts during Q4 and FY19 earnings conference call.
He noted that the domestic subscription growth in the fourth quarter was muted due to multiple shifts in the tariff order timelines and the difficulties the distributors faced in coping up with the consumer demand.
“Despite that, our full year subsection revenue growth of 17.4% is ahead of our initial estimates as well as the industry growth. I’m reasonably certain that with our decision on pricing, our excellence in on ground execution, and finally the strong uptake of our channels, we will have an upside in our subscription revenues. My optimism on subscription revenue is essentially an outcome of our share strength across markets,” Goenka asserted.
He said that on the reach side the company is working with multi system operators (MSOs) and direct to home (DTH) companies to do joint consumer marketing campaigns. “Wherever the MSOs are not agreeing with us we are doing ourselves consumer marketing for them to make the choice unilaterally. So that’s the only avenue available to us, either jointly go with the distribution company or go on our own wherever they are errant.”
Answering a question about TRAI’s plan to float a consultation paper to bring down subscription price, Goenka said he had gone to TRAI and had told them that the tariff order would increase the burden on the consumer. “They didn’t believe me at that point in time. But let’s see what the consultation paper they come out with. My view is that any more disruption to this will have an upheaval not just from the industry but now even the consumer.”
In terms of the possibility of the 15% bouquet discount clause being implemented by TRAI, Goenka warned that it will lead to litigation because that would mean trying to go against the Supreme Court judgment. “Why will we take it lying down?”
He is also confident that the NTO will benefit all the industry stakeholders. He also said that the industry needs to be patient for the next 2-3 months to see the result of the new regime.
“I am pretty certain that it will be beneficial to all. I tried to explain to MSO and to the distribution companies that it is in their interest now because the pricing has become B2C, the more they sell about they earn and if somebody still wants to do back end deal that’s not something that we at ZEE are willing to do.”
He also conceded that on the ad front, growth was impacted in Q4 due to advertisers pulling back on spends due to the uncertainty in the interim period and the decision to move two key channels out of the free to air (FTA) portfolio.
“The tariff order should settle down soon and I expect the advertisers to resume spending once that happens. Further, with the elections behind us, I believe that the newly formed government will stimulate the consumer demand which has seen some signs of moderation recently,” he stated.
Talking about growth expectations for subscription and advertising, he said that FY20 outlook for the industry on advertising will be low double-digit. “That is my expectation and of course, as ZEEL always does, we will expect to beat that. Coming year definitely we will see us growing ahead of industry because there are still markets where we are growing. Even in the last quarter we have grown, and we do expect that we will continue to grow in some of the markets going forward as well. On the back of that we will certainly look at delivering growth higher than industry.
On the subscription side, he said it is a little hard to predict the growth numbers. “Our guidance, which was of low teens, still stands but I will be revisiting this guidance may be at the end of Q1 and we will talk to you more at that time, and that obviously is for it to get better not otherwise.”
He further noted that ZEEL still has almost 3 to 4 deals that have not yet happened where it is not in the desirable packs. “Secondly, we have not received the reports from all of the parties till date that we should have had by now. We are taking it up with TRAI against these errant parties. So right now, I will be firing in the dark, therefore I have given you my intuitive judgment. By Q1, I hope to have all these in place to give you proper guidance.”
Goenka was also asked about the reason for rejigging the channels like Zee Anmol which was free then pay and once again became free. Goenka noted that the NTO is a black swan event that has happened in the industry which is why the broadcaster has to make these changes.
“It’s not something that we witness year-on-year and therefore we have to go out there and make sure that what we are going out with works, and in that situation there are times when we may have made certain assumptions while taking the pricing into the market, realized that this pricing may not work and we have gone and revised it,” he noted.
He also noted that dealing with MSOs has now become far simpler. “Apart from a few MSOs who are still not coming around and trying to find backdoor entries to do deals which we have shut completely, most of them are falling into place and following the tariff order as prescribed by us and by the regulator, and therefore it should only make business simpler, rather than the bilateral negotiations it will be transparent.”