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Television garners cream of the ad pie - Views on News from Equitymaster
 
 
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  • Aug 7, 2000

    Television garners cream of the ad pie

    The growth of television as a preferred medium of advertising in India is the phenomenon of the nineties. While the overall ad spend has increased by around 23% over the last five year’s the television medium has outstripped other medium by growing at over 29%. It basically implies slower growth for the other mediums such as the press, radio and cinema.

    The credit for this goes to the cable and satellite channels, which now get almost half the revenues that the television medium gets. (The state broadcaster ‘Doordarshan’ gets the other half).

    Years
    (Rs. In bn)
    Total ad
    spend
    TV Ad
    spend
    Share of
    TV (%)
    FY95 22.20 5.32 24.0%
    FY96 35.02 8.75 25.0%
    FY97 42.27 10.77 25.5%
    FY98 39.58 11.08 28.0%
    FY00 63.53 19.06 30.0%

    Source: Nimbus Communictions Draft Prospectus

    So far the advertisement rates (per 10 second rates) have on an average held up across the industry. But there are wide variations depending on the success of programmes and the time slot that the programme caters. Also, with the number of channels proliferating by the day the advertising rates are expected to fall in the near future.

    This spells trouble for the private broadcasters since they are relatively more dependent on the advertising revenues than ‘Doordarshan’. This is primarily due to the fact that private broadcasters do not receive the full payments that they are entitled to receive from the respective cable operators. The cable operator understates the number of subscribers that he caters to. So while he collects on an average Rs 125–150 per subscriber the broadcasters end up getting on an average only Rs 8–10 per subscriber per month.

    This explains why broadcasters such as Zee, Star and Sony are racing towards establishing a pay TV model and establishing addressability at the cable operators end.

     

     

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