http://in.reuters.com/article/businessNews/idINIndia-41341120090727?feedType=RSS&feedName=businessNews
Broadcasters see relief from subscription Mon Jul 27, 2009 2:54pm IST By Bijoy Koyitty and Swati Pandey MUMBAI (Reuters) - India's broadcasting firms are set to benefit from a lucky shift to a subscription-based model as they slug it out with media peers for a shrinking advertising pie in a highly competitive market, industry watchers said. Also, increased competition among direct-to-home operators and the proposed entry of more players provide broadcasters new revenue opportunities without incremental cost, they added. Zee Entertainment saw subscription revenue from domestic DTH rise 88 percent in April-June from a year ago while advertising revenue fell 29 percent. New Delhi Television saw DTH revenue rise by a quarter in the period. DTH "will help in offsetting the impact of the slowdown in advertising revenue," NDTV, which runs and operates English news channels NDTV Profit and NDTV 24X7 said in an e-mail response to Reuters. Broadcasters took a hit in earnings since late last year as the global economic slowdown prompted key advertisers - retail, real estate and auto - to cut expenditure. Indian general elections, which took place in April and May, and the popular Twenty 20 cricket series also saw general entertainment channels scrambling for advertisements. However, broadcasters, who started seriously exploiting opportunities in subscription model since 2006, are predicting an exponential growth in revenue from DTH, which has a mere 10 percent share in India. "As we expect a significant jump in this share in the coming years, more players are entering the DTH market," said KR Choksey analyst Rohit Maheshwari. The total number of DTH subscribers in India is expected to cross 20 million by 2010 from over 13 million in March 2009, estimates Neha Gupta, senior analyst at Gartner. Besides the existing players such as Sun Direct, Tata Sky, Dish TV, Reliance Communications' Big TV and Airtel DTH of Bharti Airtel Ltd, Videocon has also expressed interest in entering the DTH market. SHIFT IN REVENUE MODEL Under-reporting of subscribers by cable operators has been hurting broadcasters, whereas DTH has no such constraints, thus helping generate a larger share of revenue from subscription, Salil Kapoor, chief operating officer, Dish TV, said. "Over the next few years, our business model would undergo a shift in favour of a subscription-led model, as is the case globally," said Subhash Chandra, Chairman, Zee Entertainment after it announced its quarterly results this month. The share of subscription revenue is expected to surge to nearly 55 percent by 2015 from just 23 percent in 2007, data compiled by Mumbai-based Canara Robeco Asset Management showed. Analysts said they expect the broadcasting sector to outperform the broader media segment on larger traction from subscription, but were skeptical on whether subscription would outdo advertising. "We do agree that subscription revenue would form a substantial revenue contributory, although overshadowing advertisement revenue would take a bit of time," said Ram Patnaik, an analyst with Religare Capital Markets Ltd. (For more news on Reuters Money click in.reuters.com/money)
