Diet Report – Media & Entertainment: Ad cap removal expands inventory, not demand
Guest Column: Karan Taurani, EVP at Elara Capital, says removing the 12-minute-per-hour TV advertising cap is directionally positive, but estimates it could increase industry ad revenue by just ~1–3%
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Karan TauraniPublished:
Aug 17, 2026 11:11 AM
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- The Government of India has removed the 12-minute-per-hour cap on TV advertising, which is expected to provide a modest revenue increase of approximately 1-3% for the industry, as most channels already operate at or above this limit.
- The opportunity for additional advertising inventory is primarily concentrated in regional general entertainment channels (GEC) and free-to-air channels, which together account for about 25-30% of TV advertising expenditure (AdEx).
- Despite the regulatory change, the television industry faces significant challenges, including declining viewership and content engagement, with overall TV AdEx projected to decrease from INR 313 billion in CY21 to INR 263 billion by CY25.
- Increased advertising inventory may not lead to proportional revenue growth due to weakened advertiser demand and pricing pressures, particularly as advertisers increasingly favor digital platforms for their superior targeting and measurement capabilities.
As per the Government of India’s announcement, the removal of 12-minute-per-hour TV advertising cap is directionally positive; however, we estimate it could increase industry advertising revenue benefit by a mere ~1–3%. Most of the industry already operates at or above the cap, with news channels carrying 16–18 minutes/hour, while live sports offers limited scope to additional inventory. Consequently, the opportunity is likely to remain concentrated in select regional general entertainment channels (GEC) and free-to-air (FTA) channels, which make up ~25–30% of TV AdEx.
Higher inventory could also lead to pricing dilution, particularly as advertiser bargaining power has shifted toward digital platforms, which offer superior targeting, attribution and measurement capabilities. Fundamentally, television’s key challenges relate to declining viewership and content engagement, rather than a shortage of ad inventory. Pay-TV households fell at ~4% CAGR during CY20–25, while connected-TV (CTV) households are expanding. Sun TV Network is better positioned than Zee Entertainment, in our view, given its stronger regional exposure and resilient viewership.
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We expect the policy change to drive FY28E ad revenue uplift of ~4.5% for Sun TV and 2.0% for Zee; however, corresponding PAT uplift is estimated at only ~2.2% and 3.3%, respectively, translating into TP upside of a mere ~1.0% and 3.2%, respectively
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Positive regulatory change, but against a weak industry backdrop:
The removal of the 12-minute-per-hour advertising cap is directionally positive for television broadcasters, providing greater flexibility to monetize inventory and partly address the regulatory disadvantage vs digital platforms. However, we estimate overall TV advertising revenue benefit at a mere ~1–3% in a best-case scenario. The change comes against a structurally weak backdrop: TV AdEx declined at a ~4% CAGR from INR 313bn in CY21 to INR 263bn in CY25, while Zee’s advertising revenue declined at a ~6% CAGR during FY20–26 and remains ~31% below FY20; Sun TV’s ad revenue declined at a ~3% CAGR and remains ~15% below FY20. The key issue is not how much additional inventory broadcasters can offer, but how much advertisers are willing to absorb and at what price.
Incremental inventory opportunity concentration limited:
A meaningful portion of the industry was already operating at or above the historical cap. News (~7–8% of TV AdEx) usually carries 16–18 minutes of advertising per hour, while parts of regional TV have operated above 12 minutes. Live sports (~22–24% of TV AdEx) has limited flexibility to increase inventory without disrupting events. The largest headroom therefore sits within Hindi GEC (~26% of TV AdEx), which has operated closer to the cap. However, Hindi GEC’s constraint is more advertiser demand than inventory availability, given audience fragmentation and limited content innovation. We see opportunity concentrated in regional GEC and FTA channels, together accounting for ~25–30% of TV AdEx.
Higher inventory does not mean proportionately higher revenue:
Even in segments with additional headroom, incremental minutes translate into revenue only if advertiser demand is adequate to absorb them without diluting pricing. Where demand and inventory utilization remain healthy, broadcasters can monetize additional minutes while protecting yields; where demand is weak, higher supply increases advertiser negotiating leverage and pressures rates. Assuming ~25% of TV AdEx benefits from the change and generates 5–10% net incremental advertising revenue after pricing dilution, the overall industry uplift would be a mere ~1–3%. This explains why the headline inventory opportunity is materially larger than the likely financial benefit.
Pricing and advertiser bargaining power remain bigger constraints:
TV’s recent run reinforces this demand-side problem. FCT volume held stable until CY24, before falling ~10% in CY25. Hindi GEC and Sports drove ~50% of TV AdEx on ~8% of volume, but yields are eroding as cricket shifts to free streaming and GEC audiences fragment. Meanwhile, advertiser bargaining power has structurally increased as budgets shift to digital, leaving TV with more inventory but weaker pricing power
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Published On:
Aug 17, 2026 11:11 AM TagsAd capMedia and entertainmentKaran tauraniElara CapitalAd Cap Removal
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