Stock Fundamentals

Media shows mixed signals

Bavadharini KS | Updated on March 08, 2018 Published on March 04, 2018

The print media did not perform well, while digital and radio have grown consistently

In the latest December, the performance of top companies in the print media was subdued due to lower income from advertisement. However, the other platforms of the newspaper companies such as digital and radio have grown steadily.

On the other hand, the television broadcasting companies have shown strong performance, thanks to good advertisement income.

Print media

Since the festive season was split between the September and December quarters, the full benefit of a strong quarter was not realised in the third quarter. The split dampened advertisement revenue growth in media companies. Slower recovery in ad spends from sectors such as real estate and the government has also weighed on the earnings of these companies.

DB Corp reported revenue and profit declines of 4.5 per cent and 34 per cent Y-o-Y respectively. The company gets nearly 70 per cent of revenue from advertisement and the rest from circulation. Though circulation income grew in the latest quarter, it was offset by the decline in advertisement due to lower ad spends from key sectors such as real estate and the government. Increase in raw material expenses also affected the company’s margins and profit growth.



Similarly, Jagran Prakashan, another leading Hindi newspaper company’s advertisement revenue fell 3.9 per cent Y-o-Y due to low government spends.

However, advertisements from FMCG and real estate sectors were robust, according to the company’s management. The company reported a decline in profit of 11 per cent Y-o-Y owing to increase in costs.

HT media, a major print and publishing company with presence in both English and Hindi (through its subsidiary) newspaper markets, reported revenue decline of 3.7 per cent Y-o-Y on account of muted spending from government, retail, auto, banking and education clients.

The English print segment’s ad revenue declined 8 per cent as the impact of GST and RERA is still hurting the sector. However, the Hindi print division (Hindustan Media Ventures, subsidiary of HT Media) saw ad revenue growth of 5 per cent, thanks to improved contribution from sectors such as FMCG, entertainment and luxury. HT Media’s profits increased 29 per cent Y-o-Y because of the sharp focus on cost-reduction initiatives.

However, competition in Uttar Pradesh and Bihar led to low cover price realisations for these companies.

Digitisation of set-top boxes has helped improve the financial performances and would continue to help in subscription and ad growth, with many households set to digitise.

Television broadcasting

Zee Entertainment Enterprise, a leader in the industry, reported strong revenue and profit growth of 12 per cent Y-o-Y and 28 per cent Y-o-Y respectively in the December quarter. Advertisement contributes over 64 per cent to the revenue, which grew 26 per cent on account of large players increasing their ad spends, but the subscription revenue declined 15 per cent Y-o-Y. The operating margin improved to 32 per cent this December from 29 per cent last year. Though the company’s key general entertainment channels are Zee Marathi and Zee Sarthak, it is gaining market share in other regional languages too, particularly Telugu and Tamil.

Sun TV, a dominant player in the South, has also reported good results, thanks to recovery in advertisement growth of about 22 per cent across all its channels.

Malayalam and Kannada channels have contributed mainly to the growth in advertisement income; they registered growth of 48 per cent Y-o-Y and 28 per cent Y-o-Y, respectively. Subscription revenue grew at 16 per cent Y-o-Y. Though Sun’s profits increased 11 per cent Y-o-Y. The company reported overall revenue growth of 16 per cent Y-o-Y.

With the competitive intensity increasing in the southern market with the entry of players such as Zee and Colours bringing in new content and expanding markets, Sun TV too is looking to expand to newer markets to increase its market position.

Published on March 04, 2018
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