With the possible coming together of Reliance-backed Viacom18 and Disney Star as well as a Zee-Sony merger looming large, regional players such as Sun TV are in a difficult position, media experts said.

The top four national networks are expected to combine their strengths to form two rival blocks that will see them emerge as the top two media conglomerates in the country post the current wave of consolidation.

“Regional networks are vulnerable if the consolidation happens,” said Karan Taurani, senior vice-president, research at Mumbai-based brokerage Elara Capital.

“The two media giants (Zee-Sony and Disney-Reliance) will command a market share of 65% in TV and 40% in the digital space. This will work favourably for them in terms of negotiating content and advertising deals owing to the economies of scale they will bring to the table. Regional players (such as Sun TV) may have to either ride on these networks (through a partnership) or risk losing share,” Taurani added.

Earlier reports stated that Disney was in talks with a clutch of players, including Sun TV and the Adani group apart from Reliance Industries, for a potential sale of its India business.

Sun TV is the dominant player in the South, operating TV channels in six languages, though Tamil Nadu is its main market, where it has a viewership share of around 39%. Its competitors include Zee Tamil and Star Vijay, which have taken away over 10% share from Sun TV in the last three-four years, according to experts tracking the market.

The broadcaster’s net profit in the September 2023 quarter increased 13.86% to `456.24 crore, up from Rs 400.71 crore in the previous fiscal quarter. Domestic subscription revenue increased by 5.34% to Rs 418.23 crore, increasing operating revenue by 28% to Rs 1,017.98 crore. Total revenue for the quarter increased by 27.48% to Rs 1,125.08 crore.

Besides TV channels, Sun TV has an OTT platform called Sun NXT, and FM radio stations. It also owns the SunRisers Hyderabad team in the Indian Premier League and SunRisers Eastern Cape in the South African Twenty20 League.

In the last three months, Sun TV’s stock has grown 12.33% to Rs 673.40 a share on the BSE, even as the broader Sensex gained 3.47% in the same period. Analysts at brokerage firm Motilal Oswal say that players such as Sun TV have faced pressure on ad revenues even as subscription revenues have sustained over the last few months.

“Sun TV’s continued conservative approach toward investments in OTT while focusing on movie production and monetisation of its existing library remains a key risk in the fast-growing OTT space,” it said in a recent report on the company.

Brokerage ICICI Direct said it was awaiting clarity on the management outlook on content strategy, growth and capital allocation ahead.

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