Sun TV to launch flanking GECs in Tamil, Telugu markets by Sep

Broadcaster Sun TV Network is planning to launch flanking general entertainment channels (GEC) in Tamil and Telugu markets by September, the company’s top management has revealed during a conference call with analysts.

The company will also begin its expansion outside South India with the Bengali market. The Bengali GEC is slated to launch in second half of FY19 while the Marathi GEC would be launched in FY20.

The company will reposition its hybrid movie and music channel Sun Life as its second GEC in the market. The channel targeted at youth will be launched in the next couple of months.

The Sun TV management is confident that the second GECs will not cannibalise the mainline GECs Sun TV and Gemini TV as the content will different, new and youth-oriented.

The management expects the Bangla channel to achieve break-even in 2-3 years. The channel will have original content instead of dubbed content. The company has projected that the Bangla channel will achieve 10-12% viewership within a couple of years.

The company also stated that it will refurbish content with more investment towards youth-oriented content across genres.

The management believes that the incremental ad revenue growth will come from new channel launches. It also stated that the new channel launches is not a knee-jerk reaction to falling viewership but it is part of the long-term strategy.

In Q1 FY19, the company’s revenue break-up was Rs 362 crore (advertising), Rs 20 crore (broadcasting), Rs 43 crore (international subscription), Rs 100 crore (cable), Rs 212 crore (DTH), and Indian Premier League (IPL) revenue at Rs 382 crore.

The revenue from advertising and broadcast fee grew 20% to Rs 360 crore on the back of yield expansion/inventory utilization, low base and higher ad volumes.

During the quarter, the overall ad yield improved by 10% YoY. Out of the increase of Rs 40 crore in subscription revenue led mainly by an increase in subscriber base, the DTH segment contributed Rs 37 crore while the balance Rs 4 crore came from the cable segment.

The company’s dependency on Sun TV has been falling as other genres have been showing faster growth. Currently, Tamil contributes 50% to total ad revenues compared to 67% earlier. In Q1 FY19, the ad revenue from Kannada, Malayalam and Telugu genres grew by 57%, 37%, and 20% respectively.

The management said that the digitisation momentum remains robust in Tamil Nadu and is expected to conclude by Q4FY19. Incrementally, 8 million TV homes in Tamil Nadu are yet to get digitised. Kerala and Karnataka are already digitised while AP might have few analog subscribers yet to be digitised.

It also noted that Sun TV’s market share loss in Q1 FY19 was due to IPL and switch-off by Arasu Cable on the analogue network. The management noted that Arasu deliberately switched off Sun TV signals due to re-negotiation of analogue subscription revenues.

In order to improve viewership, Sun TV had launched four new shows in primetime over the last 3-4 months.

The capex for movies will be Rs 425 crore for FY19. Three big-ticket Tamil movies are under production, out of which one is expected to be released in Q3/Q4 FY19. The amortisation is expected to be Rs 425 crore for FY19.

The management plans to step up its payout ratio given the company’s Rs 2200 crore cash balance as on June 2018. The remuneration for the chairman and joint MD for FY19 has been capped at Rs 175 crore.

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