TRAI tariff order impact subscription & ad revenue – TV18

TV18, the country’s largest news- and reality-based programming company, said the introduction of a new tariff order by the Telecom Regulatory Authority of India impacted both its advertising revenue as well as subscription income.

TRAI introduced a new, demand-based subscription model for television channels from Feb 1, while a ruling by the Madras High Court modified the order to give full pricing freedom to broadcasters like TV18.

As a result, most broadcasters started off with relatively high channel prices, which impacted their reach and affected their ad revenue. At the same time, the high channel prices were expected to boost subscription revenue, which seems to have failed to materialize so far.

“Viewership has been impacted for all major broadcasters as process of consumers choosing channels/packs and on-ground realignments in distribution value-chain are still underway,” TV18 said in its quarterly update.

“This has led to volatile viewership, which is expected to take some more time to settle.”

The expected jump in subscription revenue is also yet to materialize.

“Gross subscription revenue growth has been impacted too, as subscriber base has yet to normalize due to implementation challenges. We have increased our marketing intensity, as consumers are in the midst of exercising their choice,” said the company — controlled by billionaire Mukesh Ambani.

TV18, however, said things are likely to improve going forward.

“Subscription dynamics are likely to improve in future as the broadcasting business moves to B2C (pull-based) rather than B2B (push-based). Our channels (through ‘Colors wala pack’ as well as distributor packs) have witnessed strong uptake in this transition phase; led by breadth of content at a value price-point, and improved distribution tie-ups.”

It said that advertising was also impacted by the conversion of two of its Hindi channels, Rishtey and Cineplex, to pay channels.

The company re-launched these from 1 st Mar 2019 as pay-channels Colors Rishtey and Colors Cineplex.

“Cineplex now plugs the whitespace we had in the pay Hindi movie genre. Moving away from Freedish distribution impacted their reach and consequently hurt late-Q4 viewership and ad-monetization.

“However, we believe that in the new tariff regime pay-channels shall have better consumer connect as well as distribution economics in the medium-term. This shall also improve the monetisation of primary pay-GEC Colors, which had faced some viewership/ advertiser cannibalisation,” it added.

Despite being a pre-election quarter, total revenue from TV18’s national news channels fell 1% on year to Rs 224 cr, even though there was a 6% increase in regional news channel revenue to Rs 64 cr.

Revenue from entertainment channels, such as Colors, fell even more. Total revenue from entertainment channels fell 29% to Rs 893 cr from 1,254 cr. This also led to a dip in March-quarter operating profits from entertainment channels to Rs 20 cr from Rs 40 cr for the same quarter last year.