General Entertainment Channels (GEC), Free-to-Air (FTA) channels to gain most from TV ad cap removal: Report
New Delhi [India], August 19 (ANI): While the removal of the 12-minute-per-hour television advertising cap is likely to have a limited impact on overall industry ad revenue, the benefits could be concentrated in regional General Entertainment Channels (GEC) and Free-to-Air (FTA) channels, which together account for around 25-30% of TV advertising expenditure, according to a report by Elara Capital.
The Government announced to remove the ad duration cap for television channels to promote fair competition in the broadcasting sector and improve the ease of doing business.
"We estimate overall TV advertising revenue benefit at a mere Rs 1-3% in a best-case scenario. The change comes against a structurally weak backdrop," the report said.
India's television industry faces a structural challenge of audience migration and limited content innovation, rather than a shortage of advertising inventory.
While India's overall TV universe remains sizeable at Rs 193 million households, the traditional Pay-TV base has been shrinking, declining at a Rs 4 per cent CAGR during FY20-25 to Rs 104 million in CY25, including an 11 million household loss in CY25 alone. Contrastingly, weekly active connected-TV households rose to more than 40 million from Rs 30 million in 2024.
At the same time, advertising spending is increasingly reflecting this shift -- FMCG continues to account for Rs 46 per cent of TV AdEx, but its share has fallen 426bp over the past five years, while eCommerce, at Rs 16 per cent, remained broadly flat YoY, the report noted.
A significant portion of the television industry was already operating at or above the erstwhile 12-minute advertising cap. News channels, which account for around 7-8% of TV AdEx, typically carry 16-18 minutes of advertising per hour, while some regional channels have also operated above the cap. Live sports, contributing around 22-24% of TV AdEx, have limited scope to add inventory without disrupting programming. The largest headroom is therefore in Hindi General Entertainment Channels (GEC), which account for around 26% of TV AdEx and have generally operated closer to the cap.
However, the key constraint for Hindi GEC remains advertiser demand rather than inventory availability, amid audience fragmentation and limited content innovation. It further highlighted, even in segments with additional inventory headroom, incremental ad minutes can translate into higher revenue only if advertiser demand is strong enough to absorb the added supply without pressuring pricing.
While healthy demand and inventory utilisation can allow broadcasters to monetise additional minutes while maintaining yields, weaker demand could increase advertiser bargaining power and put downward pressure on ad rates.
"Assuming Rs 25% of TV AdEx benefits from the change and generates 5-10% net incremental advertising revenue after pricing dilution, the overall industry uplift would be a mere Rs 1-3%," it noted, stressing, "We see opportunity concentrated in regional GEC and FTA channels, together accounting for Rs 25-30% of TV AdEx."
Overall, while the regulatory change is positive for broadcasters' earnings, the impact is likely to be too limited to materially change earnings growth or trigger a structural re-rating in valuations, as per Elara Capital. (ANI)
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