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Media 2003: The show has begun - Views on News from Equitymaster
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  • Dec 24, 2003

    Media 2003: The show has begun

    The year 2003 was largely a year of uncertainty for the media sector, especially for the broadcasting community. Uncertainty, not with respect to gains in stock prices, but rather with respect to the implementation of Conditional Access System, popularly known as CAS.

    (Rs) Price on
    Dec 31, 2002
    Price on
    Dec 10, 2003
    % change
    SENSEX 3,377 5,286 57%
    MID-DAY 18 48 163%
    TV 18 78 190 144%
    ADLABS 59 104 74%
    PNC 26 40 54%
    ZEE 98 142 46%

    CAS, basically, involves the consumer/viewer buying a set-top box for viewing channels. Unlike the current prevailing scenario, wherein the cable viewer pays a flat rate for a bouquet of channels provided by the local cable operator, in a CAS regime the consumer will pay for only what he chooses to see i.e. channels he has subscribed for. The biggest advantage of CAS is that broadcasters will be able to know the exact number of subscribers (read homes), which have subscribed to their channels, which would result in curbing the under-declaration of subscribers by cable operators.

    (Rs) Price on
    Dec 31, 2002
    Price on
    Dec 10, 2003
    % change
    TIPS 52 45 -12%
    SABTV 95 79 -17%
    ETC 73 58 -21%
    PENTAMEDIA 25 9 -66%

    However, the forthcoming elections have had a major role in the postponement of the implementation of CAS. This is because, while the post-CAS scenario will be a boon for the broadcasting industry, there are fears being raised that the consumer will have to shell out more than what he is paying currently. Hence, the postponement. Further, with the system already being in place in Chennai and now in Delhi, it has been noticed that the response to the service has been lukewarm, owing to the same apprehensions, as well as the one time set top box charge.

    What to expect?

    We remain bullish of the long-term prospects of the industry and the initial hiccup with regards to CAS should be over soon. India has over 80 m television homes of which over 50% homes have cable and satellite (C&S) connection and this number is expected to continue to grow substantially over the next few years. In the last couple of years, along with the growth in television and C&S homes in the country, new players and channels have sprung up in niche segments like news, fashion and sports. Television has emerged as the preferred mode of entertainment for the masses. Further, on the adspend front, the industry, which had witnessed a slowdown owing to the fact that FMCG companies (a key contributor to the total adspend in the country) had curbed their advertisement expenditures, things are once again looking up owing to improved economic outlook.

    Going forward, ad-revenues of major broadcasters are expected to improve with the economy showing strength, as corporates would increasingly look at increasing adspend to garner larger revenues. Another interesting trend is that the ad-spend of FMCG companies is increasingly getting concentrated towards rural markets. Buoyed by ad-spends, regional channels are expected to stage a comeback on the revenues front. Moreover, with new sectors opening up like telecom, healthcare and insurance, advertisements by these segments would also aid the adspend growth.



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