>India cable & satellite TV (Macquarie Research)

● Colors considered joint No.1 in Hindi GECs; one ad break a big help: Viacom 18’s (unlisted) Hindi GEC Colors has garnered 304 GRPs for the latest week, just one short of the 305 for genre leader, Star Plus. We highlight the fact that the surge in GRPs was driven by Colors’ strategy for all programmes, except for its most popular family soap, Balika Vadhu, to run with only one commercial break per half-hour show. In addition, the channel has adopted the strategy of telecasting blockbuster Hindi movies over the weekend. As a result, the channel has had a remarkable and sustained increase in weekly GRPs over the last 12 weeks.

● Colors’ addition to One Alliance to strengthen its reach: From 1 April, Colors will be distributed as part of the One Alliance bouquet (Viacom 18’s MTV, Nickelodeon and Vh1 are already part of it, as are the Sony channels). This is a positive driver for Colors, as it means wider distribution and reach.

● Competitive intensity in Hindi GECs increasing: In a bid to protect its No.1 position in the genre, Star Plus has run no advertisements between 8am and 9pm over the past few Saturdays and lined up back-to-back Hindi movies, following Colors’ successful strategy. This trend of Star Plus and Colors of cutting commercial air time to increase stickiness and thereby channelling GRPs is likely to hurt shares in TV ad revenue, as it reduces ad inventory.

● Zee TV’s ad revenue share to feel pressure: We expect Colors’ strong position in the genre to work a continuing shift in advertising revenue away from No.3 player Zee TV towards joint No.1 player Colors. We note that ad revenue growth for Zee Entertainment slumped to 1.7% YoY in 3Q FY3/09. Zee Entertainment’s management asserted in the 3Q earnings call that the slump in ad revenue was entirely due to the economic slowdown. Given the tough macroeconomic outlook and with Colors now considered joint No.1, we do not see upside risk to our FY3/10E ad revenue growth forecast of 5% YoY.

● General Election to benefit news channels: The upcoming elections to the Indian Parliament, slated for 16 April to 13 May 2009, will be a big driver of ad revenues on news channels and on Zee News in the June 2009 quarter.

● Weekly GRP trends for Regional channels have not shown any change. We believe regional channels are better placed vs Hindi GECs to ride the slowdown. Zee News Limited (ZEEN IN) continues to have a solid leadership in its key regional GEC markets of Maharashtra and Bengal, with a solid lead over the competition (see Figures 6 and 7 on Page 3).

To see full report: INDIA CABLE