Sun TV losing to rivals in key markets

Rebound in viewership, market share unlikely in near term

Sun TV Network's stock has shed 12 per cent since its high earlier this month, as increased competition in its core markets have resulted in viewership hitting lifetime lows.

The share of the company's flagship Tamil general entertainment channel continued to slide, from 44 per cent in April to 42.4 per cent in May and, to 40 per cent now.

This was closer to 55 per cent a year before. This has been eroded by higher competition in the segment from Zee (Zee Tamil), Star Vijay and Colors Tamil.

This loss in share, over the previous year as well, has played out in other southern markets. In the Telugu market, the company's Gemini TV had lost about 8 per cent viewership share year-on-year in June, with Zee Telugu and Star Maa gaining.

Analysts at JM Financial say Gemini (currently at fourth position) has been relegated to battling for third position with ETV, as Star Maa and Zee Telugu are competing for top position in the second largest TV market in South India.

Sun's position in the Kannada and Malayalam markets is also weak. It has lost 34 basis points in the Kannada market (around 16 per cent share) now and is behind Colors and Zee. In the Malayalam market its share is at 13.6 per cent, down 200 basis points since December, lowest in 16 months.

Analysts at Emkay expected Sun TV's viewership to rebound after the Indian Premier League cricket competition; instead, it has dropped. They estimate the Tamil and Telugu markets to contribute over 80 per cent to Sun TV's advertising revenue.

Fresh content launches and sustained viewership are crucial for reversal in viewership share, they add.

The brokerage has downgraded the stock and cut its target multiple to 25 times, from 29 times. As it will take time for the new programming and advertisement growth to bounce back, there could be more pressure on the stock in the near term.