Digitalisation of cable TV along with alliances and acquisitions among television networks were the major highlights during 2011 for the media broadcasting industry.
Television networks were consolidated through acquisitions (Walt Disney picked up 100 per cent stake in UTV Software), while alliances formed the backdrop of TV distribution with big networks, like Zee and Star, coming together to distribute combined channel bouquets.
According to Mr Farokh Balsara, Head, Media and Entertainment, Ernst & Young, “Consolidation was the trend during 2011, and going forward there will be more pan-Indian networks emerging with about five-six large networks. Going forward, we may see North India-based networks like Network18 going down south while Sun TV may look at acquisitions up north. There will hardly be any standalone channels left and each will form part of a bouquet belonging to some big network.”
Meanwhile during 2011, TV networks continued to launch more channels keeping in mind digitalisation in the future. Today the number of TV channels in India has grown to 845, including 430 news and current affairs channels. Several new channels were launched in 2011 focused on regional and niche genres such as food, lifestyle, technology and science.
Intense competition in the general entertainment and news genres along with low barriers to entry led broadcasters to offer differentiated content in the regional and niche channels businesses.
Some of the new channels launched during the year were Mix (the music channel of Multi Screen India), UTV Starz ( Bollywood content), Life OK (Star India's second GEC) and Sonic (Viacom18's youth channel).
New regulations
“There are a lot of new regulations coming into play with digitalisation which is favourable for television networks, making them launch new channels. New channels are looking at new kinds of revenues and going forward there will be 50-50 ratio between subscription and advertising revenues. Television, the largest segment of the media industry, will see positive growth in 2012,” said Mr Timmy Khandari, Leader, Entertainment and Media Practice, PwC, India.
However, slowdown concerns did affect advertising revenues for the television industry during the year. “With growing concerns of economic slowdown, the advertisers, mainly in FMCG and telecom, have reduced their spending on television. As a result, the ad growth rate forecasts have been reduced to 13-15 per cent in 2011 instead of around 20-25 per cent forecasted at the beginning of 2011. Ad revenue growth rate in the second half is estimated to slow down in the range of 8-10 per cent. Inventory utilisation levels for Hindi and regional GECs have been at 75-80 per cent, while these are around 60 per cent for other genres. However, the leading channels in the respective genres are likely to benefit as advertisers play safe bets with lower budgets,” claims a report by Ernst & Young.
But broadcasters will not depend on advertising revenues alone to boost their bottom lines. Subscription revues will be on the rise as digitalisation will bring about more transparency in viewership among channels. “Revenues will be subscription-driven and broadcasters will have more stable revenues streams and not be dependent on advertising alone,” added Mr Balsara.
However, the biggest bonanza for the media industry was the Bill to digitalise cable TV that was passed in Lok Sabha towards the end of 2011. “Clearly the landscape will change now for both broadcasters and distributors. There will be transparency with respect to the number of subscribers (which is currently not declared correctly) leading to greater subscription revenues for broadcasters and distributors like the MSO (multi-service operators),” observed Mr Jehil Thakkar, Head, Media and Entertainment, KPMG.