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What Sun TV Must Do To Defend Its Viewership

Sun TV Network Ltd., which lost a chunk of its viewership to Viacom18’s Colors Tamil, must increase its investment in the Tamil entertainment genre to defend its viewership, according to Kotak Institutional Research.

The brokerage maintained its ‘reduce’ rating and target price of Rs 975 on the stock in its latest report. Since the launch of Colors Tamil, Sun TV’s viewership share declined 15 percentage points to 47 percent over the previous 15 months, according to Broadcast Audience Research Council’s ratings

What Sun TV Must Do To Defend Its Viewership

In the same period, Colors Tamil garnered a viewership share of 4.3 percent in Tamil general entertainment genre. Kotak Institutional expects a gradual increase in Colors Tamil viewership led by Viacom18’s marketing and content distribution strategy.

The Tamil entertainment market was largely “homogeneous” with Sun TV meeting consumer demand. However, the audience is now evolving and there is demand for contemporary or bold content, the brokerage said.

In that scenario, Sun TV has two options — step up investments in Tamil Nadu at the cost of near-term margins by launching a second Tamil GEC to fulfill the demand of viewers and defend its share in ratings, or lose both market share and margins in the long term, the report said.

Sun TV contributes 50 percent of the group’s total ad revenue and has nearly 60 percent share in the Tamil GEC advertising market. According to Kotak, digitisation in Tamil entertainment, turnaround in Indian Premiere League and Sun TV’s progress in non-Tamil markets have been largely factored in the stock price. The brokerage expects further loss of viewership share in case of delay in digitisation.