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DTH News : TV channels bloom despite ad crunch
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Despite a slowdown in advertising revenue in the past two years and a weak subscription revenue base, broadcasters have added 444 television channels in the last five years with over 100 channels getting added in 2010 alone. Last year saw the second highest additions of television channels in the decade after 2008 which saw a record permission for 152 channels.

Also, the last five years witnessed a 229% jump ing the number of permitted channels compared to the first five year period of the decade, shows an analysis of the television channels data of the ministry of information and broadcasting (MIB).

In the last two months alone, MIB granted permission to 39 channels including nine high definition (HD) channels from Star India, ESPN and Sun TV network.

However, this happened despite a negative growth of the advertising industry in 2009 and only a 8-9% effective ad-revenue growth in last year which otherwise was growing at 15-17% in 2005-2008 period. Analysts peg the size of the Indian advertising industry at Rs 26,000 crore. However, between the broadcasting and print medium, it is television which now commands over 50% share of ad-revenue, which is fueling the additions of more channels, experts said. A recent analyses by Media Partners Asia, a Hong Kong-based international media agency shows that between December 31 2009 and December 31 2010, 12 listed media firms witnessed upto 46% decline in their respective share prices and an erosion of their market caps compared to only three-four firms whose share prices grew between 19-59% . The top losers included news broadcasters like TV Today, NDTV, TV18, and ZEEL while gainers included Network18, Sun TV, Zee News and UTV among others.

India has 632 channels including the 611 satellite and 21 terrestrial channels of Doordarshan, some of which are also distributed via satellite. Nearly 55% of the permitted channels are in the news and current affairs genre despite the fact that the genre generates only around Rs 1,200 crore of annual revenue on a combined operational investments of over Rs 3,000 crore. The non-news genre, however, dominates the television business generating over Rs 8,000 crore in revenue from advertising and an equal amount from subscription revenue.

“Remove the 15-20 broadcasters who are making money, rest of the channels specially in the news genre are being run on funds whose source can be questioned. If authorities do investigate it, it won’t be surprising that a bulk of news channels have political backing in every which way even though government does not support political parties owning television channels,” an industry expert said.

Experts said the growth in the broadcasting business has shifted from national to regional level with over 230 news channels being in regional languages. Foreign news channels have also made a beeline for India in the past three years with over a dozen international news channels now available. “Apart from US and UK, now one can access the news channels from Russia, Japan, Germany, China, and Korea among several other countries. This shows the growing economic importance of India for these countries who regularly cover the Indian politics and business stories on their respective networks,” says a senior media analyst from a leading consultancy firm.

Another analyst points out to the cost-effective operations as among the reasons why so many channels are permitted in India. “A broadcaster just needs to pay a one-time fee of Rs 5 lakh for a five-year licence and Rs 1 lakh of annual fees to broadcast here. The entry barriers are not that tough for a legitimate broadcaster, whether local or oversees compared to some of the western countries,” a business analyst who tracks media said.

However, the MIB is set to review and implement a stricter norms for broadcasters from April onwards, sources said. These will include fixing a high net worth requirement for the applicants and strict rules for the promoters of such channels. A recommendation from Trai is already under discussion in the MIB, sources said.

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