Sun TV expects Rs 350-400 cr incremental subs rev from TN due to digitisation

MUMBAI: As cable TV digitisation progresses in Tamil Nadu, Sun TV Network is eyeing huge gains in its subscription income from the state.

In a discussion with analysts recently, Sun TV Network president R Mahesh Kumar said that the South India broadcast network could end with incremental subscription revenue of Rs 350-400 in the near future once the cable TV digitisation is completed and analogue is switched off.

Currently, Sun TV Network roughly earns Rs 270 crore subscription revenue in a quarter including Rs 180 crore from the direct to home (DTH) operators and Rs 90 crore from the cable TV operators.

The state government-owned Tamil Nadu Arasu Cable TV Corporation, which is the dominant MSO in the state, pays a flat fee of Rs 2.5 crore to Sun TV Network.

The broadcaster hopes to be the biggest gainer in Tamil Nadu as it has the state’s most popular GEC brand Sun TV, which has a market share of close to 70%.

“We hope to get an additional Rs 350-400 crore subscription revenue from TN. In April-June, we expect a big ramp up in numbers and after that, it will settle down,” Kumar told the analysts.

He also noted that Arasu has communicated to the ministry of information and broadcasting (MIB) that it will switch-off analogue by 31 March.

Kumar said that a total of 3 million set top boxes (STBs) have been seeded of which Arasu has seeded an estimated 1.5 million STBs. Tamil Nadu has a universe of 12.5 million TV homes.

“Digitisation is imminent in Tamil Nadu. Based on the information in public domain, Arasu has informed the MIB that they will switch-off analogue by 31 March. It might take some months for digitisation to fructify,” he noted.

He also said that direct to home (DTH) operators are seed STBs at a frantic pace. “We have already started seeing some traction in the DTH revenue numbers for the January. Our group company Sun Direct also recorded phenomenal numbers with the majority coming from Tamil Nadu,” he stated.

He also said that the company is very close to signing a deal with Arasu. The two parties are giving final touches to the agreement.

Sun TV Network channels are also bouncing back in the Kannada and Malayalam markets where it was on a weak footing till now.

Kumar said that Udaya TV has grown 68% in terms of overall GRPs while Surya TV has demonstrated a growth of 60%. The ad revenue from Kannada and Malayalam markets have seen 27% and 48% growth in ad revenue.

“These are two markets where we had serious concerns. We have made serious inroads in these markets. We are working towards improving our position,” Kumar said.

Sun TV’s content cost has gone up as it is moving to commission model in the Tamil. As competition heats up, the company is also investing in high-impact and high-value fiction properties.

“We have been spending money on certain impact properties and also high-value fiction properties regularly. This will be the trend in future considering the onslaught of competition with the entry of new players in the market,” he said.

Kumar said the company will look at entering new markets in future without elaborating further. “We will also try to go to other markets where there are big opportunities and try to step up. It’s a constant quest for balancing our objectives,” he stated.

For the quarter ended 31 December, Sun TV Network’s ad revenue was Rs 358 crore, DTH revenue (Rs 187 crore), Analogue/digital cable (Rs 95 crore), International subscription (Rs 41 crore), and broadcast fee (Rs 20 crore). Its paid DTH subscriber base was 48.45 million.

“On an average, there is 21% growth while Malayalam and Kannada have delivered significant growth. This is purely because of increase in utilisation levels. Previous year’s growth was impacted by demonetisation. Our yield levels have gone up significantly. That has contributed to the overall ad revenue growth,” Kumar said.

The network shut down Udaya News (Kannada) and Gemini News (Telugu). It also incurred a one-time expense for one-off settlement with the employees of these channels.

Sun TV Network had a cash balance of Rs 1700 crore till December. The company wants to maintain its liquidity as it might want to acquire an asset.

“We would like to be liquid because of the exciting opportunities in the market. We could also pick up some attractive assets. We are not saying we are trying to acquire. It pays to be extremely liquid without any kind of debt obligation,” Sun TV Network Group CFO SL Narayanan said.

On the over the top (OTT) platform Sun NXT, Kumar said that the company is still in investment mode in this business. “It’s going to take a while before it becomes a significant investment,” he said noting that the service has 6 million downloads.

He also said that the OTT service is for people who want to consume on the go and pay for it. The ad-supported doesn’t make sense for Sun NXT, Kumar added. He also said that the network will not produce content exclusively for OTT in the foreseeable future.

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