Market Insight

Demonetisation continues to slow TV revenue growth in India

May 15, 2017  | Subscribers Only

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst, Advertising and Television Media

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Indian media and entertainment group Zee Entertainment Enterprises Ltd reported strong financial results for the latest financial year, overcoming rising competition and the withdrawal of higher-denomination bank notes.

The company’s TV revenue grew 8.1% to 7.94 billion rupees ($123.8 million) in the year to 31 March. Advertising revenue was up 9.2% to 3.67 billion rupees ($57.2 million), and subscription revenue was up 10% to 2.26 billion rupees ($35.2 million).

Zee Entertainment, owned by the Essel Group, is one of the leading players in the Indian free-to-air and pay TV market. As well as the flagship Hindi-language general entertainment channel. Zee TV, the company operates pay channels in its home market and serving Indian expats in Europe, North America and elsewhere.

Zee Entertainment attributed the modest revenue growth to the country’s abrupt call for demonetisation of all 500 and 1,000 rupee banknotes on 8 November 2016, an initiative to crack down the use of illicit and counterfeit cash to fund illegal activity and terrorism.


Our analysis

TV is the largest advertising segment in India, contributing 46% of the country’s total advertising revenue. IHS Markit forecast TV advertising revenue to grow at a CAGR of 12.6% in 2016-2021.

The unexpected demonetisation announcement had caused an economic disruption which saw consumer demand dip and advertiser budgets cut, particularly in November/ December 2016. 

Zee’s latest results showed that the negative impact persisted in Q1 (January-March) 2017. We expect the company to experience a TV advertising slowdown through 2017, though the implementation of a new General Service Tax in July is expected to lift advertising spend, and thus, offset the drop.

Meanwhile, 21st Century Fox, in its latest financial report ended 31 March 2017, also attributed the 18% drop in international advertising revenue to its subsidiary Star India’s advertising performance.

IHS Markit does not expect any unfavourable impact on broadcasters' TV programming spend in 2017. We estimate Zee Entertainment’s TV programming expenses to have increased 14.8% in 2016 and will continue to grow at a CAGR of 16.5% in 2016-2021. 

The broadcaster sold its sports business to Sony Pictures in September 2016, after reporting an accumulated loss of 6-6.4 billion rupees ($94 to 100 million). With sports programming out of the picture, its programming strategy will now focus on regional programming and acquired movie rights. We expect original programming to exceed 50% of its total programming outlay by 2021, driven by improved regional TV ratings and increasing competition from international players Star India and Sony Pictures.

Asia Pacific India
Research by Market
Media & Advertising
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