As the television industry expands, there is a push from national networks to extend their growth in the regional space,many of which have been acquisition-driven. The reason being that the regional markets occupy a significant 28.4% share of the total TV advertising pie of Rs.15,500 crore in 2014 according to the FICCI-KPMG report. This would put the figure to around Rs.4,400 crore in advertising revenues for the regional market in 2014.



There are three national networks which have forayed into the regional space which include ZEEL, Star India and Viacom18.It is estimated that non-Hindi markets account for 15-25% of the top line of these three national networks says the FICCI-KPMG report. Since many of these national networks’ regional channels have a larger share of viewership, they not only demand for high rates but also enjoy a larger portion of ad spends.



National networks dominate in regional markets



Star India for instance has been putting much emphasis ongrowing their strength in regional markets in which they were not present. They acquired Telugu Network MAA TV for an estimated Rs.2,500 crore in February. It had previously acquired Vijay TV and Asianet which have done very well especially in the last couple of years. It is also further looking to launch a second Tamil GEC called Vijay Plus. The network now has its presence in all regional fronts such as Tamil Nadu, Andhra Pradesh, Karnataka, West Bengal and Kerala. In the regional market of Tamil Nadu, Sun TV occupies the largest viewership share and consequently a bulk of advertising spends go to it. But next in line is Star’s Vijay TV. In the Andhra Pradesh market, Star’s MAA TV occupies 25% of the viewership share, while MAA Gold has a 2% share according data from TAM subscribers on relative channel share for Jan-March 2015. This gives it 27% share in the market which is the same as Sun TV Network’s Gemini which also has a 27% viewership share. In the Maharashtra market, Star Pravah is at No.3 spot and close to Colors Marathi with a viewership share of 17.40%. In the Karnataka market, Star is in second place in terms of viewership share after Sun TV Networks Udaya TV (32%) with Suvarna and Suvarna Plus having a 20% and 6% viewership share respectively. In West Bengal, Star Jalsha has the maximum viewership share with 43.10%.



Similarly, TV18 Viacom’s joint venture partner had acquired ETV in December 2012 saw it get a foothold into the regional front. It had recently rebranded the channels with the ‘Colors’ identity after it acquired the remaining stake in ETV and channels are now called Colors Marathi, Colors Bangla, etc. The network is further expected to expand their foray into the regional markets. In the Telugu (Andhra Pradesh) market ETV Telugu has a 22% viewership share and is a close No.3. In Maharashtra Colors has the second most viewership share with 18.80%. While in Karnataka market Colors Kannada is a close No.3 with a viewership share of 24% of the pie. Similarly in West Bengal market Colors Bangla is the third most share with 11.40%.



ZEEL has however grown its channels in the regional markets of Maharashtra, West Bengal, Tamil Nadu, Bihar and Odisha as it already had a presence there. In the Maharashtra market, Zee Marathi dominates with a 58.50% viewership share. In the Andhra Pradesh market it is at No.2 with a 23% viewership share. In Karnataka market Zee Kannada comes in No.4 with a viewership share of 14%. However, in the West Bengal market it has a very strong presence at No.2 with a viewership share of 36.10%.



Anuj Poddar, EVP – Colors Marathi & Colors Gujarati, Viacom18 said, “We have seen a strong double digit growth during the last year (FY2015) as advertisers are seeing the value of that regional channels like us have to offer. Colors Marathi has seen a 30% plus growth. We are also seeing a lot of ecommerce players come on board who are looking to target the regional markets. We have lifted the scale of production for the regional channels and hence the good results,” he said.



Sharada Sunder, EVP – Regional Channels, ZEEL said, “We have been seeing growth across the regions and we have grown at the rate of the industry and depending on the performance of the channels in the respective geography their growth has been higher than the industry average. If you see Zee Marathi we have grown higher than the industry average.”



Standalone regional channels feel the pressure



With the dominance of the national networks in the regional space, where does that leave standalone regional channels? Except for Sun TV Network which is the one of largest networks operating in the regional space the other players are much smaller and operate mostly in one market. With the expansion and investment in the regional space by national networks,many standalone regional channels are feeling the pinch, especially in content costs. National network supported regional players are receiving enough investment for original content production, while standalone regional channels are forced to do the same to stay in the game. While dubbed content of Hindi shows which used to cost around Rs.25,000 per episode and used be the staple of standalone regional players are now forced to produce more original content which costs around Rs.70,000 – Rs.2,50,000 per episode.



Eshita Surana, Director of Bengali GEC Aakash Aath said that the competition has been increasing a lot and the national network owned regional channels have put a lot of pressure on standalone regional channels. The channel is currently fourth in the ratings chart in the West Bengal market. Similarly, V. Kalyanasundaram, MD, Polimer TV a Tamil GEC in a media report had said that after competition increased, they had started investing in original content and the costs were significantly higher.



Surana says that they have still managed to see an ad growth of 35-40% since the channel was rebranded to Aakash Aath from Akash Bangla last year because of the content. But she added it has become difficult with the competition from large national network channels. “These channels have deep pockets to spend on content. However, if you see their spends with regards to the viewership they are not commensurate. We in fact are not going overboard on spends but are spending wisely in terms of content and getting good viewership,” she said.



So does this mean the end for many of the smaller lone regional channels like Mahua TV in Bengal which died due to the competition or Rupashree Bangla which is of ABP Group and had a viewership share of 0.80%? Or will consolidation be the key?



Few of the media planners we spoke to in the regional markets said that there is still scope for standalone regional channels to survive. Ganesh Baliga, MD, Fifth Estate says, “When we are working out a media plan we are not looking at whether it is part of a larger network or a standalone channel. We are looking at what the channel delivers for our brand and if it fits our target audience then so be it. For instance we were working on a brand which targets carpenters and we found out that a standalone channel in the Tamil market targets them the most, so we went with it.”



While Koka Satyanarayana, Business Director of media agency BPN pointed out that standalone regional channels offer more benefits to media planners and brands as they allow more room for negotiation than regional channels part of national networks. “For instance a national network like Star will not come down on the rates and won’t have much room for negotiation, but with a standalone channel I have a better chance of bargaining,” he said. He further added that in a standalone channel there is also more frequency for the same money spent on a TVC of brand that you would go on national network regional channel which is beneficial to clients.



Poddar feels that consolidation will be the key for many as being part of national networks offers more benefits in terms of production and reach. For advertisers approaching a national network works as they can get the maximum benefits and wider reach together.



“In every market there are some top 5 or 6 very serious players, I think that will that will continue to be there. And people who come in to experiment with new offerings so they will figure out whether their attempts have been successful and they will stay or consolidate based on what their experience in the market is,” Sunder said.



Surana said that it is all about good content and that depends on the storyline for shows and not whether you can get a big star on the show. “No matter how much money channels put on shows it depends on the story and the way it is produced as that will get viewership. So definitely channels that can offer that will do well,” she said. She added that consolidation will not work.



While media planners say that standalone regional players still have advantages over national network regional channels due to room for negotiations and better value on investment for clients. However, these channels may have to settle for letting go of double the inventory at lesser prices cutting their margins. With the dominance of national networks in the regional front it has forced them to do just that. Forstandaloneregional players it will definitely be a test of endurance.