TRAI regulations on Ads can be a significant drag on earnings

TRAI regulations will lead to reduction in ad inventory across genres thus impacting the ad volumes. Current primetime ad inventory for leading GEC channels could be ~14min/hr vs 12min/hr (to be regulated on clock-hour basis as per TRAI order)

Ad revenues from movies to be impacted significantly. Economics of the movie genre would be impacted because of 30 min ad-free regulation (significant reduction in ad inventory) Companies believe that it is unfair to put such stringent regulations on advertising time in the current scenario when even first phase of digitization in not through and advertisement remains the primary revenue stream.

Sports genre will be impacted due to ban on part-screen/drop-down advertising and limited ad breaks but the genre gets sold differently so taking price hike could be easier. While the broadcasters will try to offset this by yield improvements, we believe this will be a tough ask in the current weak ad environment.

While prime time GEC inventory might be impacted by 10-20%, the impact would be much higher in other genres like news, movies, and sports. We believe it will be difficult for the broadcasters to fully offset the volume impact through price hikes given current weak advertising environment.