MUMBAI: The very survival of small television networks and free-to-air (FTA) channels is at stake after the advertising slump due to Covid-19 pandemic delivered a crippling blow to their cashflows, and with costs mounting every day, the liquidity crunch has now begun hindering their day-to-day operations.

Advertising revenues are a lifeline for smaller channels, constituting over 75% of total revenues but for the FTA channels, they are the only revenue stream. Out of around 900 permitted TV channels in India, only 330 or 1/3rd are pay channels, while 65% are FTA. The top five broadcasters own around 250 of these channels. A top executive at a large media agency said that no one knows how deep the impact of the current slump will be and for how long this uncertainty over economy will last. “The testing time will be post July when consumers’ sentiments will be truly revealed. Right now everything is based on guess work,” he said. “In April, advertising expenditure was down by 80% and May isn’t looking any better.”

Some experts fear that the tough advertising environment could last a few months before the consumer sentiment changes. “Most of the categories and advertisers are not advertising. I believe this phase will last for another 5-6 months as advertising is driven by sentiments. It’s now a question of survival,” said the ad sales head of a TV network.

ET had earlier reported that categories which advertise heavily during the summer, including soft-drinks, ice-creams, ACs, etc have either not released or deferred their ad campaigns.

“We are in a unique situation where the clients with money aren’t advertising while others who are facing disruption in their business, are in no position to spend,” said a top executive of another media agency.

Sources say that planned campaigns of leading consumer companies like Coca Cola, McDonalds and KFC have been cancelled or put on hold.

A top executive from a traditional media company added that larger networks like Star India, Zee Entertainment Enterprises and Sony Pictures Networks India will weather the storm due to their size, existing cash reserves, support from holding companies — and distribution revenues which might get delayed, but will not be wiped out.

“It looks like the overall ad ecosystem has collapsed and most of the impact will be on smaller and regional networks. If the crisis drags on for another 5-6 months, you will see a lot of channels staring at bankruptcy,” he added.