Sun TV Network puts Marathi GEC launch on hold due to economic slowdown
MUMBAI: Sun TV Network has put the launch of its proposed Marathi GEC Sun Marathi on hold due to the slowdown in the economy.
The channel with an estimated investment of Rs 150 crore was expected to launch by end of the calendar year 2019. The company’s management had indicated that the launch of Sun Marathi might get delayed.
“See, that is because of the kind of situation which now exists. Because we all had our view of the Indian economy booming and firing on all cylinders, so we are treading with caution now. We’re unlikely to go and make a big splash at this point in time. So — well, please wait until we — you’ll hear from us. For the time being, it’s put on hold,” Sun TV Network Group CFO SL Narayanan told analysts during Q1 earnings conference call when queried about the delay in Sun Marathi launch.
In the earlier conference call, Narayanan had stated that the final call on Sun Marathi launch has not yet been taken. “On Sun Marathi, we’ve not taken the final call on the launch date. But there is some work happening, but it has not gone into a complete activity,” Narayanan had stated.
Sun TV Network president & MD R Mahesh Kumar had stated that the investment in Sun Marathi is approximately Rs 50-60 crore.
Giving the break-up of Q1 revenue, Sun TV Network CFO VC Unnikrishnan disclosed that the ad revenue for the quarter is Rs 368 crore, broadcast revenue is Rs 10 crore, international subscription revenue is around Rs 41 crore, cable including digital is about Rs 169 crore while the DTH revenue is Rs 228 crore. The revenue from the Indian Premier League (IPL) is Rs 244 crore.
Narayanan also stated that the company’s ad revenue growth estimate for FY20 is upwards of 10%. He noted that the economy is witnessing a slowdown while pointing out at the decline in automobile sales.
“Of course, our people on the ground are working harder than ever before, and we are looking at very, very innovative ways to give greater value to advertisers so that we garner more wallet share. Our own internal targets are much higher than 10%. But I’m saying that looking at the horizon with so many macro headwinds, it is not fair on our partners’ responsible management to put out any kind of growth expectations because there’s bad news all around,” he said.
He also mentioned that the regional advertisers have also become cautious due to the prevailing economic situation. He cited the example of retail trade in Tamil Nadu which has cut down on ad spends as there is no liquidity in the system. “People are actually not seeing any ROI in terms of putting money in on the ad,” he noted.
Asked whether the company is still optimistic about the revenue of its Bangla GEC, Narayanan said that the channel needs to be given some time as it launched only five months back. He also said that the implementation of the new tariff order (NTO) has hit the industry badly and Sun Bangla was not an exception.
“See, unfortunately, we didn’t anticipate this new tariff order will come and drive a course through everything. So unfortunately, as we went in there, this whole thing came and threw the entire system into disarray. So that’s also one of the reasons why we — but anyway, I think it’s a step in the right direction because we think that there is a lot of potential there. It is a market where there is not much of TRPs available for trading. So — and there are 2 well-entrenched competitors, and we thought that this is the kind of play. And I think that our content strategy also has been very well thought of. All those series have been very well made, slickly made. But it will take some time. I mean, it’s not — Rome wasn’t built in a day. And so we are doing all the right things. And I’m sure we will see an uptick pretty soon,” Narayan elaborated.
He also said that the company’s strategy to venture into Bangla and Marathi markets is a well thought out expansion strategy. He also asserted that the company’s balance sheet will not get impacted even if Sun Bangla fails.
“I don’t think we can now sit back and say that we shouldn’t have done this. We’ve actually applied a lot of thought, and we identified that this is the place to go because to go into the regular Hindi market would have called for enormous amounts of capital. And you know our company, we are not a company which will bet a farm. So even assuming but not admitting at some stage this turns out to be a damp squib, it is not something that will wreck the balance sheet of Sun TV. So it’s a very measured step. It gives us a foothold into a new market which is north of India. So give us some time. I think it’s just 5 months since we launched — February launch, right? So about 5 months is too short a time to evaluate, so I’d request you to give us at least a few more quarters,” Narayanan said.
The company plans to spend about Rs 300-325 crore on movie acquisition. Sun acquires almost 60% of movies that are released across Southern markets.
“Yes, I think we still continue to buy a good amount of movies. More than 60% or more of the movies released across the southern markets are purchased by us. And if we look at the last, maybe a couple of quarters, a lot of big-ticket names has been come into our kitty. So I don’t think there’s any pressure there. Prices keep changing depending on, like I said, certain competitors increasing at several points in time. But otherwise, I think we’re comfortable in terms of our acquisitions. We should look at for the financial year, maybe about INR 300 crores or INR 325 crores. Let’s see the budget at this point in time. It could move depending upon any high ticket movies coming towards the second half,” he averred.