IPL, festival season and delay in the implementation of NTO 2.0 are some of the factors that are bringing some relief to the Indian TV industry.
The TV industry, which has been reeling under pressure due to the COVID-induced lockdown, is seeing some relief thanks to the ongoing Indian Premier League (IPL).
Karan Taurani, Vice President, Elara Capital, expects IPL and the festival season to bring cheer for the upcoming months in terms of ad spend.
In a research note, Taurani said, "Ad spends on TV have recovered from 50 percent of pre-COVID levels in June toward 80 percent of pre-COVID levels in August."
He expects this to grow in the low single digits during the festival months between October and December, thanks to the increase in spending led by non-fiction content and IPL.
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Along with this, what is bringing more relief to broadcasters is the delay in the implementation of New Tariff Order (NTO) 2.0 which media experts say is likely to happen next year.
The implementation of NTO 2.0 is likely to result in a decline in subscriber revenue of 12-14 percent for the broadcast industry.
However, the Bombay High Court on October 20 has restrained the Telecom Regulatory Authority of India (TRAI) from taking any coercive action to implement NTO 2.0.
The assurance coming from TRAI that it will not push NTO 2.0 until the final order comes as a big relief for the broadcasters. TRAI in the past has tried to forcefully implement the new pricing regime for TV channels, say industry experts.
In fact, on July 24, TRAI had directed broadcasters to implement NTO 2.0 by August 10. However, the final judgment on the implementation of TRAI is yet to come.
According to Taurani, the highest negative impact of NTO 2.0 will be on sports-based broadcasters.
Sports channels in times of COVID-19 have been under pressure due to no telecast of live sports because of coronavirus-led lockdown. In addition, ad volumes on sports dropped significantly because of repeat telecast of old sports content.
Overall, the TV industry in terms of ad revenues has seen a significant drop due to the pandemic.
According to a Pitch Madison 2020 report, TV advertising revenues dropped more than 40 percent in the first half of this year. The TV industry in H120 earned Rs 8,084 crore in terms of ad spends. In the first half of 2019, the ad spends were as much as Rs 14,199 crore.
This is why broadcasters are heaving a sigh of relief saying that the delay in NTO 2.0's implementation will ease off some pressure when the industry is already under pressure because of coronavirus impact.Also, experts believe that even if the final order on NTO 2.0 comes in November or December it is unlikely that it will be implemented as whichever party loses, they will approach the Supreme Court.