TV channels bet big on ad potential abroad

Last Updated: Sun, Dec 05, 2010 19:01 hrs

The big names are no longer relying on subscription revenues alone

Last week, the Sun TV Network appointed Global Media Management and World Media Connect to manage and grow its distribution and advertising business, respectively, in North America.

Sun TV’s move follows Zee’s agreement with The Nielsen Company, under which the latter would monitor its television ratings and trends in top US markets. Zee TV claims the deal is the first-of-its-kind in the South Asian entertainment industry and authentic information of its reach would fetch the network better advertisement deals.

Indian general entertainment channels are no longer relying just on subscription revenues for their overseas foray. Having achieved a critical mass in West Asia, the US and many European countries through proper audience segmentation and serving the right kind of content, they are also hiring agencies to exploit the advertisement potential in the international markets.

Ajay Vidyasagar, chief operating officer, Sun TV Network says "this initiative is focused on better monetisation of our content, both from the subscriber and the advertising revenue-end."

Bharat Ranga, COO, international business, Zee Entertainment Enterprises, says the potential in the overseas market is huge and Indian TV channels are working to make the most of this opportunity. International markets brought in 24 per cent of Zee’s '2,200-crore top line in 2009-10.

Spanning five continents, Zee reaches out to more than 500 million viewers in 167 countries. Zee has also got the top slot among all South Asian channels in South Africa, according to the latest AMP 2010 data.

Industry experts say that 65-70 per cent of revenues from international markets usually go straight to the bottom line. That is because there is no major cost, except distribution. There is usually a revenue share of 50:50 with the direct-to-home (DTH) or cable operator distributing the channel. The other major cost, content, is usually recovered in the first airing in India.

Indian TV channel networks have been periodically signing new distribution deals with DTH and cable operators abroad. Times Television Network has recently finalised a distribution deal with Asian Television Network International (ATN) Canada.

The deal paves the way for the three channels of Times TV Network – Times Now (English news channel), ET Now (English business news channel) and Zoom (Bollywood entertainment channel) – to enter the Canadian market, which has a large base of Indian and Asian community.

ATN operates 29 South Asian channels in Canada.

Colors, the flagship channel of Viacom 18, which started its India operation in 2008 launched its US operations in February this year under the channel name Aapka Colors. Gaurav Gandhi, head, international business, Viacom18 said, "The revenue potential in the international markets is very significant. However, given the challenges in the market, it could take us anywhere between two and three years to get close to the potential."

One of the key reasons for Indian channels to aggressively foray in the foreign markets is higher realisations.

While a network might sell its bouquet of channels at an average price of $1.5 in India, the subscription price in the US and the UK goes up to around $4 which directly contributes to the profits of the network.

However, industry watchers concur that though the networks might soon reach optimum subscription soon, increasing the advertisement revenue pie could turn out to be a pitched battle as all the channels in the same genre would be fighting for the same advertiser’s money.

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