Even as advertisement revenue during the second quarter of the year was affected mainly owing to a few one-offs, Sun TV Network is expecting its ad income to grow in lower double digits in the second half of the current fiscal.
The company has said that it would take a couple of quarters to see better growth in its General Entertainment Channel (GEC) channel Sun Life, which was recently rejigged to tackle the decline in market share due to the entry of new players like Zee and Colors. Sun TV is also in the process of beefing up its OTT channel Sun Next, with exclusive content and is in talks with some of the major telecos to improve its reach.
The estimated ad revenue growth is around eight per cent year-on-year for the company, according to analysts. The growth during the quarter was impacted by the Kerala floods, which took place close to the Onam festival affecting Rs 70 million in ad revenue. Shift of Dussehra festival to the third quarter, which impacted another Rs 70 million, and broadcasting two prime-time slots without ads for two days continuosly following the death of Dravida Munnetra Kazhagam (DMK) supreme leader M Karunanidhi. The ad revenues could have seen a growth of 10 per cent, if these one-offs were not there, analysts said.
The company management, in a recent earnings call with analysts, said it expects ad revenues to grow in the 'early teens' during the last six months of this fiscal. Ad revenue in the industry is expected to grow by 10-12 per cent, they added.
In Tamil Nadu, the company is restructuring various slots and changing the model to increase its own content in the overall pie and gain market share through a second GEC channel, Sun Life. It has set a target to boost overall market share in Tamil Nadu by at least 10 per cent. Sun Life, the recently revamped GEC, has had good initial response and is more on less at par in the pecking order with Colors Tamil on overall GRP, said Sun TV Group CFO S L Narayanan.
"We should also keep in mind that we have completely shifted the overall genre of that channel, and it will take a little time for people to get used to that.
We are extremely confident and committed in revamping that channel, which will generate substantial GRPs over time," he said. The company is expecting ad revenue from the revamped GEC to grow from the levels of Rs 10-12 million in the end of second quarter, to Rs 40-50 million in the next couple of quarters.
The company, which has revived its movie production business of late, expects to produce 3-4 blockbuster movies under its banner, which would also support its movie amortisation plans. While the thought on buying out movie rights for broadcasting is that it would not go for every movie that comes out, it is focusing on buying rights that could improve revenue generation.
At present, it has launched one major movie Sarkar, with actor Sarkar and its next movie with actor Rajinikanth in the lead role is likely to come be released in January, 2019. It is estimating an investment of around Rs 2.5-3 billion towards movie production this fiscal. The company is also looking at starting movie production in Telugu.
Its new GEC in Bangla is expected to come up in the last quarter of the current fiscal, and the company expects to invest around Rs 1.5 billion in the first year of launch.
Another major push would be to its Over The Top (OTT) channel Sun Next, which it has been using to archive the programmes broadcasted on its channels earlier. It is putting some exclusive content in the app now and is working on a larger plan for this business. It currently has close to 8,000 movie titles.
"A few months back we were not convinced that a business case exist.s But now we have given a very clear indication to the market that we will be investing more and more into Sun Next and in content that will first get premiered on Sun Next, though it may or may not be broadcast on the TV channel," said Narayanan. "Sun Next will emerge as a very compelling business for us," he added.
With Sun TV moving to its own production of programmes and owning the IP of the content, it would help Sun Next to grow better. It is also in advanced stage of discussion with some of the telecom majors to integrate the app on their platforms.