Mumbai: The Government’s decision to remove the long-standing 12-minute-per-hour advertising cap for television channels could give broadcasters greater flexibility to monetise their programming. However, according to Elara Securities analyst Karan Taurani, the regulatory relaxation is unlikely to trigger a meaningful revival in television advertising revenues because the industry’s larger problem is not a shortage of advertising inventory, but weakening advertiser demand, audience fragmentation and shifting consumer behaviour.
Taurani estimates that the removal of the cap could increase the overall television advertising revenue pool by only around 1–3% in a best-case scenario. While broadcasters will have the ability to add more commercial minutes, the market’s capacity to absorb this incremental inventory without putting pressure on advertising rates remains limited.
More inventory, but limited room for monetisation
A significant part of the television industry was already operating close to, or even above, the erstwhile regulatory ceiling. News channels, for instance, typically carry around 16–18 minutes of advertising an hour, while certain regional channels have also operated beyond the 12-minute threshold.
Live sports, which account for roughly 22–24% of TV advertising expenditure, offer relatively little incremental inventory because excessive commercial breaks could disrupt the viewing experience.
This leaves regional general entertainment channels (GECs) and free-to-air (FTA) channels as the segments with the most meaningful opportunity to add inventory. Together, these segments account for around 25–30% of TV AdEx, according to Taurani.
However, even here, the additional inventory will translate into higher revenues only if advertisers are willing to buy it at acceptable rates.
Advertiser demand is the bigger challenge
The fundamental question, therefore, is whether advertisers need more television inventory.
Taurani argues that the answer is not necessarily affirmative. Assuming that only around 25% of TV advertising expenditure meaningfully benefits from the regulatory change, and that this segment generates 5–10% net incremental advertising revenue after accounting for possible pricing dilution, the overall industry benefit would amount to just around 1–3%.
In other words, removing the regulatory ceiling expands the supply of advertising opportunities, but does not automatically expand demand for those opportunities.
The concern is particularly relevant at a time when advertisers have greater bargaining power because of the rapid migration of budgets towards digital platforms. Digital media offers advertisers more precise targeting, attribution and measurement, making it increasingly difficult for television to command premium pricing simply on the strength of additional inventory.
TV advertising has already been under pressure
The timing of the regulatory change is significant because it comes against a weak television advertising backdrop.
According to Taurani’s assessment, TV AdEx declined at a compound annual growth rate of around 4% between CY21 and CY25, falling from approximately ₹313 billion to ₹263 billion.
The performance of individual broadcasters reflects the same pressure. Zee Entertainment’s advertising revenue declined at around 6% CAGR between FY20 and FY26 and remains approximately 31% below FY20 levels. Sun TV Network has fared relatively better, although its advertising revenue has still declined around 3% CAGR and remains about 15% below FY20.
The fall in advertising volumes also underlines the demand-side pressure. After remaining broadly stable until CY24, FCT volumes declined by around 10% in CY25.
Thus, for broadcasters, the immediate challenge is not simply creating more commercial slots, but convincing advertisers to spend more on television.
Audience migration is a bigger structural concern
Taurani’s analysis suggests that television’s structural challenge extends beyond advertising regulations.
India’s overall television universe remains substantial, at around 193 million households compared with approximately 175 million in CY20. Yet the composition of that universe is changing rapidly.
Pay-TV households declined at around 4% CAGR during FY20–25 to approximately 104 million in CY25, including a loss of around 11 million households during CY25 alone. At the same time, active connected-TV households have continued to expand, crossing 40 million compared with around 30 million in 2024.
This transition reflects a broader change in viewing habits, with consumers increasingly moving towards short-form video, OTT platforms, social media and connected-TV environments.
The implication for broadcasters is straightforward: additional advertising minutes cannot compensate indefinitely for declining or fragmented engagement.
Content remains television’s bigger battle
For Taurani, the regulatory relaxation therefore addresses only one part of the television ecosystem.
Broadcasters can create additional advertising inventory, but they cannot manufacture advertiser demand unless audiences remain engaged. That makes content innovation and audience retention increasingly important to the long-term health of television.
Hindi GEC and sports continue to account for a disproportionately large share of TV advertising expenditure relative to their advertising volume. However, yields are coming under pressure as audiences fragment and sports viewing increasingly shifts towards free streaming platforms.
FMCG remains the largest contributor to TV AdEx, accounting for around 46%, but its share of television advertising has fallen by more than four percentage points over five years. E-commerce, meanwhile, accounts for around 16% of TV AdEx and has remained broadly flat year-on-year.
The changing advertiser mix reinforces the point that television is competing not merely for inventory utilisation, but for relevance within increasingly digital-first media plans.
Sun TV better placed than Zee to benefit
Among major broadcasters, Taurani believes Sun TV Network is better positioned than Zee Entertainment to capture the benefits of the regulatory change.
More than 90% of Sun TV’s television exposure is concentrated in regional GECs, where the broadcaster enjoys strong market positions and relatively resilient viewership. This could allow the network to monetise incremental inventory with comparatively lower pricing pressure, provided advertiser demand remains healthy.
Zee, on the other hand, has substantially greater exposure to Hindi GEC, which contributes around 40% of its advertising mix. While Hindi GEC theoretically has greater scope to add inventory, Taurani believes advertiser demand in the segment is comparatively weaker.
Consequently, Sun TV is expected to derive a larger advertising revenue benefit from the policy change than Zee.
Earnings benefit is positive, but modest
The impact on financial performance, however, is unlikely to be transformational.
Taurani estimates that the removal of the advertising cap could increase FY28E advertising revenue by approximately 4.5% for Sun TV Network and 2% for Zee Entertainment. On total company revenue, this translates into an estimated uplift of around 1.3% for Sun TV and 0.7% for Zee.
Because incremental advertising revenue carries a high contribution margin, the impact on profitability is somewhat higher. FY28E PAT could increase by around 2.2% for Sun TV and 3.3% for Zee.
Interestingly, Zee could see a larger percentage increase in PAT despite the lower advertising revenue benefit. Taurani attributes this to Zee’s thinner earnings base and consequently higher operating leverage.
Even so, the potential valuation impact remains limited, with the analyst estimating target-price upside of around 1% for Sun TV and 3.2% for Zee.
Regulatory relief, but not a structural growth catalyst
The removal of the 12-minute advertising ceiling is undoubtedly a positive regulatory development for television broadcasters. It gives networks greater flexibility to monetise their content and removes a regulatory constraint that does not exist in the same form across competing digital platforms.
But Taurani’s analysis suggests that the industry should not mistake additional inventory for additional demand.
The television business is confronting a more fundamental transition: audiences are fragmenting, pay-TV households are declining, digital consumption is accelerating and advertisers increasingly demand targeting, measurement and attribution.
Against this backdrop, the removal of the advertising cap could provide broadcasters with an incremental earnings tailwind, particularly in regional GEC and FTA segments. But unless broadcasters can stabilise audiences, improve content engagement and defend advertising yields, the additional commercial minutes may simply create more inventory rather than substantially more revenue.
For investors, therefore, the policy change is best viewed as “earnings-accretive but not a structural rerating trigger”. Sun TV appears better positioned than Zee to monetise the opportunity, but for both broadcasters, the bigger investment question remains whether television can regain audience momentum in an increasingly digital-first media market.
