Chennai, May 21 (): Sun TV network is going to raise advertisement fees by 19% for half hour slots in prime time for its Tamil channel and producer’s telecast fees too would be raised. This news has been viewed with surprise in advertising circles as broadcasters are too many and advertisers very little.
Budgets of corporates manufacturing consumer durables have been pruned as public spending has shrunk. This decision to raise tariffs for advertisements comes after it declared a profit increase of 12% in the March quarter compared to the last year. Sun TV maintained good advertisement revenue growth for the second quarter after a year of decline.
Last year, it posted a profit of Rs 159 crore for the quarter ending March while for same period it posted Rs. 177.50 crore this year. Market estimates put it at Rs .178 crore. Ironically this was possible only after State-owned Arasu Cable TV and Sun TV inked an agreement to allow the former channel on their cable network.
Arasu which controls all the districts except Chennai had blacked out Sun TV since it was demanding fees for coming abroad. It had banked on cable operators staying with its MSO Sumangali.
Backed by State machinery, these districts went without Sun TV. Sun TV ad revenue dropped as its visibility dropped across the State. Finally, Arasu entered Chennai and Sun TV called for a truce. It agreed to be on Arasu platform and in turn got Rs 3 crore as royalty.
The Chennai-based Sun TV revenue rose 10.7% to Rs.433 crore, the market estimated a 8% growth. Revenue from advertising rose by 14.6% to Rs.269 crore. The operating costs shot up as the channel decided to produce most of the non-serial shows.
The advertisement rates of Sun TV were not increased in the last two years. The timing to increase now with markets not showing any great upturn is what surprises investors. The balance sheet too shows that more than 40% of the revenue is from the Tamil channel. This is considered risky in investor parlance.
Sun Direct DTH revenues were up by 16% and Suriyan FM increased revenue by 28%. As on March 31, 2013, it posted a profit of Rs. 7095.60 million.