Apr 20, 2004|
Media: 'Ad'ing growth
The roots of the 'Indian' television industry can be traced back to the launch of the government owned Doordarshan channel in the year 1959 and since then, the it has evolved considerably. While till 1990, the Indian television scene was primarily dominated by Doordarshan, the development of this industry started to gather pace with the introduction of the Cable and Satellite (C&S) broadcasters in India in the early 1990s. Since then, the Indian media and entertainment industry has evolved from the single-channel era to the choice of over 100-channels currently. Now there are channels catering to a wide variety of choices including entertainment, news, movies, music, sports, spirituality, fashion, etc. Television has now emerged as the preferred mode of entertainment for the masses.
The television industry primarily has two sources of revenues - subscription and advertisements. In sharp contrast to the developed and other developing economies where subscriptions have a lead over the advertising revenues, in India, advertising continues to constitute a major chunk of revenues (over 70% in 2002) for the industry. Thus, for Indian C&S players like Zee, TV Today, etc., advertisements are the bread and butter. The importance of advertisement can also be gauged from the fact that the advertisers get to reach the masses through the medium of television.
* FICCI KPMG estimates
Just to put things in perspective, India has almost 82 m television homes with a viewing population of almost 400-450 m. Out of these, almost 42 m homes have cable connections. Further, according to the FICCI KPMG report, the television and C&S homes are expected to increase to approximately 111 m and approximately 64 m respectively by 2007! These numbers are a delight for advertisers, especially FMCG companies, who wish to reach the millions of people across sections of the society.
* Includes Outdoor, Radio and Cinema
Source: NDTV IPO
The last decade has witnessed a conscious shift of advertising revenue towards the television industry. The total media spend is estimated to be of the order of around Rs 92-94 bn in 2002 of which television advertising accounted for almost 41% (see chart above). Even at the current juncture, the level of advertising spend in India is low. To put things in perspective, the ratio of advertising expenditure to nominal GDP in India is about 0.4%. This is lower in comparison to the developed economies - UK (1%), Germany (0.8%), France (0.6%), Japan (1.1%) - as well as developing economies - Latin America (1.2%) and China (0.6%). As the Indian economy gathers steam, its advertising expenditure to GDP ratio is expected to increase.
Going forward, with the economy showing strength, corporates would increasingly look at increasing adspend to garner larger revenues. Another interesting trend, which is expected to continue, is the ad-spend of the FMCG companies, which is increasingly getting concentrated towards rural markets. No wonder most broadcasters are quickly launching regional channels to cater to a vast semi-urban/ rural population. Moreover, with new sectors opening up like telecom, healthcare and insurance, advertisements by these segments would also aid the adspend growth.
All these developments augur well for companies to whom ad revenues are an important source of revenue, whether directly or indirectly. While for broadcasters like Zee Telefilms, TV Today (the owner of the Aaj Tak channel) and NDTV (the owner of the NDTV news channels), ad spends by corporates is a direct source of revenue, for other players like Balaji Telefilms (producers of popular soaps like 'Kyunki saas bhi....' and 'Kahani ghar ghar ki') which provide content to leading broadcasters like Sony and Star, an improvement in the ad spend scenario helps the company to negotiate better rates with broadcasters.
More Views on News
Aug 14, 2017
The management believes that GST will aid the advertising spends in the long-run.
Apr 26, 2017
Should you subscribe to the IPO of S Chand and Company Limited?
Jun 21, 2017
Should one subscribe to the IPO of GTPL Hathway Ltd?
Aug 1, 2016
Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.
Feb 3, 2016
Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407