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Sun TV announces ad rate hikes across Tamil and Telugu channels
Sun TV has announced hike in ad rates across its Tamil and Telugu channels with
effect from April 1, 2011. The increase for its flagship Tamil channel Sun TV
ranges from 8-32%. Ad rates have also been increased for other Tamil
channels—KTV, Sun Music, Sun News, Chutti, and Adhitya. Rates for its flagship
Telugu channel Gemini TV have also been hiked in the 6-13% range. Rates for
other Telugu channels—Gemini Movies, Gemini Music, Gemini News, Gemini
Comedy, Kushi—will be increased in the 9-43% range. Broadcast fees (slot fees)
received from content providers will also be increased accordingly.
Hike delayed due to cricket World Cup; previous hike worked well
The ICC World Cup 2011 is scheduled in Q4FY11. As a result, Sun TV has
delayed its annual ad rate hike. The previous hike had been effected in January
2010. Post the ad rate hike in January 2010, ad plus broadcast fees grew 47%
Y-o-Y in Q4FY10 and 44% in Q1FY11. During Q2FY11 and Q3FY11 growth was
19% and 17%, respectively, which is robust considering the high base. We
expect Sun TV to focus on increasing utilisation of ad volumes across channels
and better the sales across non-GECs in Q4FY11.
Viewership trends strong
Sun TV dominates the Tamil market with a ~70% viewership share. It has
maintained its leadership in Telugu and Kannada markets with viewership shares
of ~45% and ~40%, respectively. It also continues to maintain a strong second
position in the Malayalam market with a ~28% viewership share.
Outlook and valuations: Robust business model; maintain ‘BUY’
Given the robust viewership share across South markets, we believe the current
ad rate hike too will boost revenue growth in FY12. We consider Sun TV as one
of the least risky business models in the broadcasting space. The company’s
near monopolistic market standing will enable it to outperform peers. Its
premium is expected to be maintained due to presence in high-growth regional
markets, higher earnings growth, and strong dominance. We are bullish on the
TV broadcasting space and maintain our ‘BUY’ recommendation on the stock. On
relative return basis, we rate the stock ‘Sector Outperformer’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sun TV announces ad rate hikes across Tamil and Telugu channels
Sun TV has announced hike in ad rates across its Tamil and Telugu channels with
effect from April 1, 2011. The increase for its flagship Tamil channel Sun TV
ranges from 8-32%. Ad rates have also been increased for other Tamil
channels—KTV, Sun Music, Sun News, Chutti, and Adhitya. Rates for its flagship
Telugu channel Gemini TV have also been hiked in the 6-13% range. Rates for
other Telugu channels—Gemini Movies, Gemini Music, Gemini News, Gemini
Comedy, Kushi—will be increased in the 9-43% range. Broadcast fees (slot fees)
received from content providers will also be increased accordingly.
Hike delayed due to cricket World Cup; previous hike worked well
The ICC World Cup 2011 is scheduled in Q4FY11. As a result, Sun TV has
delayed its annual ad rate hike. The previous hike had been effected in January
2010. Post the ad rate hike in January 2010, ad plus broadcast fees grew 47%
Y-o-Y in Q4FY10 and 44% in Q1FY11. During Q2FY11 and Q3FY11 growth was
19% and 17%, respectively, which is robust considering the high base. We
expect Sun TV to focus on increasing utilisation of ad volumes across channels
and better the sales across non-GECs in Q4FY11.
Viewership trends strong
Sun TV dominates the Tamil market with a ~70% viewership share. It has
maintained its leadership in Telugu and Kannada markets with viewership shares
of ~45% and ~40%, respectively. It also continues to maintain a strong second
position in the Malayalam market with a ~28% viewership share.
Outlook and valuations: Robust business model; maintain ‘BUY’
Given the robust viewership share across South markets, we believe the current
ad rate hike too will boost revenue growth in FY12. We consider Sun TV as one
of the least risky business models in the broadcasting space. The company’s
near monopolistic market standing will enable it to outperform peers. Its
premium is expected to be maintained due to presence in high-growth regional
markets, higher earnings growth, and strong dominance. We are bullish on the
TV broadcasting space and maintain our ‘BUY’ recommendation on the stock. On
relative return basis, we rate the stock ‘Sector Outperformer’.
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