Coronavirus impact: Elara Capital sees TV ad revenue around 80% lower in April

Though television viewership has been rising during the novel coronavirus, or COVID-19, pandemic as people are stuck at home with fewer options of entertainment, advertising spends have taken a hit.

Elara Capital estimates that ad revenue on TV is likely to decline 20 percent year-on-year in FY21. “TV ad revenue (including Indian Premier League) has dipped around 80 percent YoY for the first three weeks of April, which signals more troubled times,” said Karan Taurani, Vice-President, Elara Capital.

Ad volumes have also seen a 23 percent drop if we compare week 17 against the pre-COVID levels.

If we look at free commercial time (FCT) levels recorded in week 17, i.e is the week starting April 25, there was a six percent drop as compared to the previous week.

Category wise, a seven percent drop in FCT levels was registered in the news genre during week 17.

While ad volume on general entertainment channels (GECs) continue to remain stable, movie and music channels saw a 7 percent and 19 percent drop, respectively.

Genre-wise, the drop in ad revenues is in the range of 50 percent to 70 percent.

“COVID-19 pandemic has added to the milieu of troubles for large listed broadcasters that have a high exposure to the GEC genre as live content remains unavailable until the lockdown ends,” he added.

And what can add to the troubles of the broadcasters is implementation of New Tariff Order (NTO) 2.0.

If the implementation is delayed, a healthy growth in subscription revenue can be expected. Subscriber revenue contributes 35-40 percent of total revenue.

But if NTO 2.0 is implemented, then subscription revenue is likely to face multiple headwinds.

The pricing cap on channels at Rs 12 to be included in the bouquet can lead to customers dropping some channel bouquets. This will lead to more fragmentation within the industry, affecting viewership and narrowing subscription revenue for broadcasters.