Sun TV plans to shift to commissioned programming model in non-Tamil markets

[Vivek.d2h]

MUMBAI: South Indian broadcast major Sun TV Network is exploring a change in its business model in the non-Tamil markets. Starting with Andhra Pradesh, where it owns Telugu general entertainment channel (GEC) Gemini TV, the company is planning to start commissioned programming to fortify its presence in that market. “In order to strengthen its presence in the Andhra Pradesh market, the company would start commissioned programming similar to the strategy adopted by Hindi GECs unlike its sponsored programming strategy in the Tamil Nadu market,” a source familiar with the development said. Commissioned programming is similar to what private Hindi GECs follow, wherein they commission the show to a production house and pay on a per-episode basis. On the other hand, Sun TV Network’s business model so far has been of sponsored programming (or slot selling), wherein the company charges a fixed fee from the producers to broadcast their content on its channels. Content producers are given a part of airtime to sell, meet their costs and earn profits. While Sun TV’s model makes it highly profitable and mitigates the risk, rising competition has made this slot sale model less effective in other markets where Sun TV Network’s channels have lost dominance. The move towards commissioned programming, however, will increase content cost for the company. Analysts say that while the shift could be gradual, its ad revenue growth would accelerate as it switches from the slot-sale model to the tradition model. “Sun TV would no longer share ad inventory with private producers, but on the other hand, entire content cost would pass through Sun TV’s profit-and-loss account, which would reduce its margins,” an analyst said. Interestingly, in Tamil Nadu Sun TV Network will continue with sponsored programming strategy. Ad growth due to inventory utilisation Sun TV Network, which posted 15.8 per cent ad revenue growth in the second quarter of FY16 (over the year-ago period), is expecting the strong growth rate to continue in the second half. Sun TV management has indicated that there is scope for inventory utilisation to increase non-prime time on general entertainment and niche channels, while prime time on GEC is running full inventory. Thus, it is looking at increasing prime-time ad inventory to 16–18 minutes, compared to 14–15 minutes in the second quarter. It will also be aiming a higher utilisation of non-prime time and non-GEC inventory, aided by higher movie viewership in Tamil and Telugu markets. So, while ad rate hike could be expected in the GECs, the company will be looking at a volume growth for the non-GECs. In the quarter ended 30 September 2015, sectors such as FMCG, local retail and e-commerce aided ad growth. While e-commerce advertising grew robustly, its share in the overall pie remained small. Sun TV is expecting high ad spend from FMCG to continue to drive good ad revenue growth.

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[Rahulan Raj]

More strategy >>>More profits

What happened to that case on Maran :huh