Subs, ad rev of broadcasters expected to take a hit in Q4 due to TRAI TO: Edelweiss

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MUMBAI: The ad and subscription revenue of broadcasters is expected to come under pressure due to the on-going implementation of the Telecom Regulatory Authority of India’s (TRAI) new tariff order.

According to a report by Edelweiss Securities, the volatility around on-ground implementation of the tariff order and multiple deadline revisions could hurt subscription revenue in Q4 FY19.

The ad revenue of broadcasters will also come under pressure with advertisers likely to adopt a cautious stance. The pull-out of popular Hindi channels from DD Free Dish will also impact the ad revenue of big broadcasters.

The Broadcasters Audience Research Council (BARC) India has stopped publishing data for the general public. The data is only available for BARC subscribers. The Indian Society of Advertisers (ISA) has cautioned its members against using BARC data due to the fluctuation in the data resulting from the implementation of the tariff order.

“We anticipate advertisers and media agencies to be conservative in their ad spends on the TV platform in Q4FY19. Given limited clarity on subscription and black-outs happening in certain pockets, we anticipate impact on ad revenue for broadcasters this quarter,” Edelweiss Securities Senior Vice President (Research) Abneesh Roy said in the report.

“We also believe this presents an opportunity for advertisers to assert their bargaining power, which would exert pressure on ad rates charged by broadcasters in the near term. However, once the transition is over, we expect ad volumes and rates to resume their march towards the new normal depending on the post-transition data.”

Regarding subscription revenue, the report said it is difficult to ascertain impact on broadcasters’ subscription revenue given the multiple deadline extensions by TRAI, distributors pushing their own packs, and the confusion around contracts between distributors and broadcasters in the interim through 31 March.

“Distributors’ base packages do not include the key channels of certain broadcasters. We observe this varies across DPOs. Considering that there have been several complaints by subscribers in the migration phase, we believe broadcasters’ subscription revenue is likely to be impacted in Q4 FY19. We remain cautious on the stipulated deadline given elections are around the corner,” he added.

About the channel pull-out from DD Free Dish, the report said that the move will be negative in short run, however, it could be positive over long term. The DD Free Dish platform constitutes 15–16% of the TV universe in India covering 30 million households.

“We believe this would impact broadcasters’ ad revenues in the near term and may linger on over the medium term. Over the long term, however, this move presents an opportunity for broadcasters’ to convert Free Dish users into paid TV subscribers which we see as a big positive,” he noted.

The report anticipates the advertisement and subscription revenues of ZEEL and Sun TV Network to be impacted in Q4 FY19. ZEEL’s Q4 FY19 result is likely to be tempered relative to its previous quarters (25% YoY growth in Q2 FY19, 18% YoY in Q3 FY19). “However, developments around stake sale will be a key driver for the stock price going ahead,” Roy stated.


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