By Maryam Farooqui
The drop in ad spends by categories such as edtech, fintech, foodtech and e-commerce is posing a challenge for the broadcast industry, which saw its revenues for the September quarter hit by the weak ad environment.
Zee’s advertising revenue in the September quarter of FY24 is estimated to grow sequentially on a weak base in Q1 FY24, but will decline on a year-on-year basis (YoY) basis, said Pulkit Chawla, analyst, Emkay Global Financial Services.
Zee Entertainment’s ad revenues are expected to be at Rs 977.1 crore in Q2 FY24 versus its reported ad revenue of Rs 940.9 crore. The company had reported Rs 1,012.8 crore in ad revenues in Q2 FY23.
Chawla expects Sun TV to report a small uptick of 2 percent YoY in its advertising revenue. The broadcaster is expected to record Rs 351.4 crore in ad revenues in Q2 FY24 as compared to Rs 344.5 crore in Q2 FY23 and Rs 341.1 crore in Q1 FY24.
“There will be sustained pressure on growth, particularly in advertising revenues, which are expected to remain flat, said Abhishek Jain, Head of Research, Arihant Capital.
Some respite
The second half of FY24 is expected to bring some respite, thanks to the onset of the festive season and the 2023 Cricket World Cup. Chawla expects to see a gradual recovery in Zee’s and Sun TV’s advertising revenue, as FMCG companies have started ramping up spending, while new-age companies remain under pressure.
The ongoing ICC Men’s Cricket World Cup 2023 is expected to increase advertising expenditure during the festive season by 12-15 percent from last year. The cricket tournament is estimated to record over Rs 1,000 crore in ad spends on TV.
“While Zee Entertainment’s performance is likely to be impacted by continued weakness in the ad environment, the windfall from (the film) Gadar 2, which is co-produced by Zee Studios, should aid performance in Q2 FY24,” said Jinesh Joshi – Research Analyst, Prabhudas Lilladher.
Gadar 2, which released in theatres on August 11, has recorded worldwide collections of over Rs 690 crore.
“For Sun TV, the absence of Indian Premier League revenue is likely to drag total revenue quarter-on-quarter (QoQ), which will partly be offset by revenue from Jailer,” said an Elara Capital note. The film earned around Rs 650 crore.
Sun TV Network owns SunRisers Hyderabad and the cricket franchise contributes to company’s overall revenues earned through central pool revenue of the league. SRH had accounted for 7 percent of the company’s total revenue in FY23. In the June quarter of FY24, the company reported 10.38 percent increase in revenue including revenue from IPL franchise.
Subscription revenue
Some uptick in subscription revenue on a sequential basis is expected for the two broadcasters as the September quarter had the full impact of New Tariff Order 3.0 (NTO 3.0). Zee’s subscription revenue is expected to be at Rs 869.9 crore in Q2 FY24 versus Rs 821.9 crore in Q2 FY23 and Rs 907.5 crore in Q1 FY24.
Sun TV is estimated to report subscription revenues of Rs 446.7 crore in Q2 FY24 versus Rs 421 crore in Q2 FY23 and Rs 461 crore in Q1 FY24.
Zee’s total revenue is expected to come in at Rs 2,197 crore in Q2 FY24, up by 8 percent on a YOY basis and 11 percent on a QoQ basis. Sun TV’s total revenue is estimated to be at Rs 1,078 crore, up by 35 percent YoY and down 18 percent sequentially.