HOUSE-MD
Contributor
- Joined
- 16 Oct 2012
- Messages
- 3,195
- Reaction score
- 1,209
CHENNAI: Kalanithi Maran-owned Sun TVBSE 0.13 % is limiting the advertisement inventories it offers content partners, reacting to the sharp fall in ad revenues last quarter despite doubling peak slot rates. Three media houses ET spoke with confirmed, on the condition of anonymity, that Sun TV has already cut down the inventory it offers its partners from four minutes every hour to three minutes. And, they indicated, it could go down further.
Sun TV did not reply to an email seeking its view. The issue pertains to a unique in-house model Sun TV, a leading broadcast network in South India, follows. It leases out prime slots to thirdparty content providers for a fixed fee.
The content so created - typically soaps - isn't owned by Sun TV. But this still works well, because the cost of content and the risk of recouping the cost lie with the third party. Also, such content doesn't have a long shelf life, unlike movies, which Sun TV spends quite a bit of its budget buying.
As a 2012 research report by Ventura Securities indicated, three-fourths of Sun TV's content requirement is met in-house. The rest is outsourced. Updated numbers aren't available. So, under this model, the third-party producer gets a 30-minute slot, which also includes an ad inventory. Sun TV also gets to market its own ad time during this window. The inventory for its partners has now been crunched.
It could be argued that the crunching came after the regulator Trai mandated a cap on ad time so that no channel had more than 12 minutes of ad time in a programming hour.
But Sun TV could have been done in by the unique content model it follows. A Kotak Institutional Equities report on Thursday said, "The complexity of Sun's sponsored model of programming (ad inventory sharing with content partners) resulted in its content partners under-pricing their share of ad volumes."
This particularly hurt Sun TV when earlier this year it more than doubled peak-time ad rates - from up to Rs 36,000 for a 10-second slot to up to Rs 82,000. Even non-peak ad rates increased, though to a much smaller degree. This increase was in response to the Trai cap. However, much to its shock, its bread-and-butter ad revenues skidded 4.5% in the second quarter, a time when the new ad rates were in operation.
The company had earlier given a guidance of a 12% growth in ad revenues for the fiscal, something that can now be met only with an 18% growth in the second half. What this implies is advertisers were content to book their ads with Sun's partners, who were selling lower, than opt for the pricey slots of Sun TV.
It isn't yet clear if its partners will be compensated in any other way. But in markets such as Tamil language, where Sun TV is leader by far, it might not be that easy to bargain.
==
Ref: As revenue tumbles, Sun TV reduces ad inventory for content partners - The Economic Times
Sun TV did not reply to an email seeking its view. The issue pertains to a unique in-house model Sun TV, a leading broadcast network in South India, follows. It leases out prime slots to thirdparty content providers for a fixed fee.
The content so created - typically soaps - isn't owned by Sun TV. But this still works well, because the cost of content and the risk of recouping the cost lie with the third party. Also, such content doesn't have a long shelf life, unlike movies, which Sun TV spends quite a bit of its budget buying.
As a 2012 research report by Ventura Securities indicated, three-fourths of Sun TV's content requirement is met in-house. The rest is outsourced. Updated numbers aren't available. So, under this model, the third-party producer gets a 30-minute slot, which also includes an ad inventory. Sun TV also gets to market its own ad time during this window. The inventory for its partners has now been crunched.
It could be argued that the crunching came after the regulator Trai mandated a cap on ad time so that no channel had more than 12 minutes of ad time in a programming hour.
But Sun TV could have been done in by the unique content model it follows. A Kotak Institutional Equities report on Thursday said, "The complexity of Sun's sponsored model of programming (ad inventory sharing with content partners) resulted in its content partners under-pricing their share of ad volumes."
This particularly hurt Sun TV when earlier this year it more than doubled peak-time ad rates - from up to Rs 36,000 for a 10-second slot to up to Rs 82,000. Even non-peak ad rates increased, though to a much smaller degree. This increase was in response to the Trai cap. However, much to its shock, its bread-and-butter ad revenues skidded 4.5% in the second quarter, a time when the new ad rates were in operation.
The company had earlier given a guidance of a 12% growth in ad revenues for the fiscal, something that can now be met only with an 18% growth in the second half. What this implies is advertisers were content to book their ads with Sun's partners, who were selling lower, than opt for the pricey slots of Sun TV.
It isn't yet clear if its partners will be compensated in any other way. But in markets such as Tamil language, where Sun TV is leader by far, it might not be that easy to bargain.
==
Ref: As revenue tumbles, Sun TV reduces ad inventory for content partners - The Economic Times
