New Delhi [India], August 18 (ANI): The removal of the 12-minute-per-hour advertising cap for television channels may provide only a limited boost to the industry's advertising revenue, with gains estimated at around 1-3 per cent even in a best-case scenario, according to an Elara Securities report.

The report said that while the regulatory change gives broadcasters greater flexibility to sell advertising inventory, the bigger challenge facing the television industry is weak advertiser demand and declining viewership rather than a shortage of advertising slots.

'The key issue is not how much additional inventory broadcasters can offer, but how much advertisers are willing to absorb and at what price,' the report said.

A significant part of the television industry was already operating at or above the earlier advertising limit. News channels, which account for around 7-8 per cent of TV advertising expenditure (AdEx), generally carry 16-18 minutes of advertising per hour, while parts of regional television have also operated above 12 minutes.

Live sports, accounting for around 22-24 per cent of TV AdEx, has limited flexibility to add advertising inventory without disrupting events. Elara sees the larger opportunity in regional general entertainment channels (GEC) and free-to-air channels, which together account for around 25-30 per cent of TV AdEx.

However, the report cautioned that additional advertising minutes will generate revenue only if advertiser demand is strong enough to absorb the increased supply without pushing down advertising rates.

Assuming around 25 per cent of TV AdEx benefits from the regulatory change and generates 5-10 per cent net incremental advertising revenue after accounting for pricing dilution, Elara estimated the overall industry revenue uplift at only around 1-3 per cent.

The limited benefit also comes as television advertising faces pressure from changing viewing habits and the shift of advertising budgets towards digital platforms.

TV AdEx declined at around 4 per cent CAGR from Rs 313 billion in CY21 to Rs 263 billion in CY25. Pay-TV households also declined at around 4 per cent CAGR during FY20-25 to about 104 million, including a loss of 11 million households in CY25. In contrast, weekly active connected-TV households increased to more than 40 million from around 30 million in 2024.

Elara said consumers are increasingly moving towards short-form video, over-the-top (OTT) platforms, social media and connected TV, while television has struggled with content innovation.

'Broadcasters can manufacture additional inventory; they cannot manufacture advertiser demand without stabilizing audiences and improving content,' the report said.

At the company level, Elara estimated that the removal of the cap could lift FY28 advertising revenue by around 4.5 per cent for Sun TV Network and 2 per cent for Zee Entertainment. However, it said the regulatory change remains an incremental earnings positive rather than a structural growth driver for broadcasters. (ANI)