With slowdown hitting the advertising industry, the revenue growth projection for broadcasting firms is likely to come down by 17 percentage points to 26 per cent in 2009 compared with 2008, says the latest analysis by Media Partners Asia (MPA).
MPA is a Hong Kong-based independent media research agency that brings out reports on media companies and the advertising industry in the Asia-Pacific region.
According to estimates, the revenue of about 15 broadcasters in 2007 stood at $1.4 billion (about Rs 6,400 crore), which went up by 43 per cent to $1.9 billion (about Rs 8,900 crore). However, in 2009, it is expected to grow about 26 per cent to $2.4 billion (about Rs 11,215 crore).
According to MPA, there will be a significant slowdown in the advertising industry’s growth next year compared with 2007. It says the industry registered an impressive growth of 22.1 per cent in 2007. This, it adds, is likely to slow down to 17.6 per cent this year before plummeting to 12.1 per cent in 2009.
The report says that with rising carriage fees and no sharp increase in subscription revenue, short-term climate for new entrants such as Colors, 9X and NDTV Imagine will remain difficult. “Those waiting in the wings (Alvas/Time Warner, Reliance Big Broadcasting and Balaji, among others) will either continue to ‘wait and see’, exit or push for consolidation,” says the report.
The report says the revenues of broadcasting companies are expected to grow up to a maximum of 26 per cent next year versus 43 per cent in 2008 (January-December period). “But cost increases, moderating advertising growth and insufficient subscription fees (for most TV networks) will mean a 7 per cent earnings decline in the next calendar year (January-December 2009),” the report said.
The profit margins of broadcasting firms will also continue to decline, falling from a sector average of more than 25 per cent in 2007 to a low of 13 per cent in 2009, before recovering to 18 per cent in 2010, says the report.
Singling out Star TV India and Zee TV, the MPA report says these two leading broadcasters will tend to find more comfort in stronger subscription fees.
Future funding for Colors, a joint venture between IBN18 and Viacom, remains important, with annualised costs running at around $120 million (about Rs 564 crore), while ad sales in a year are likely to reach only about $50 million (about Rs 235 crore). “Breakeven is expected once advertising potentially scales up to more than $150 million (about Rs 700 crore) within the next two-three years,” says the report.
6 months ago