Mumbai: Despite facing an adverse impact in the wake of the covid pandemic last year, the media & entertainment industry witnessed some respite in ad revenues for the current quarter-on-quarter (QoQ). According to a report published by Elara Securities (India), in comparison to other traditional media, the television industry has reported healthy growth in the post-covid era. The report also indicated a positive outlook for ad revenues in the upcoming festive season.
TV Segment: Some respite (QoQ) in ad revenue, led by festive season
Traditional advertisers such as fast-moving consumer goods (FMCG) continue to spend on ads, while new-age players such as edtech, fintech, and gaming have chosen to reduce their ad spending. The CPG and automobile industries, as stated in the report, continue to maintain their ad spending, the report highlighted.
The report noted that Zee group and Sun TV are likely to expect better ad revenue of 3.5 per cent and 6.4 per cent, respectively, while ad revenue may be flat for TV Today. This growth will be driven by some stability in ad spending and the start of the festive season.
Zee’s subscription revenue, as noted by the report, may decelerate by 1.2 per cent, whereas Sun TV is likely to expect a growth of 4.2 per cent.
Sun TV reported a growth of 12 per cent as compared to the pre-covid period or FY2020, which also witnessed the absence of income generated from IPL and movies, and stood at 7.4 per cent year-on-year (YoY) of Rs 8,899 million.
Meanwhile, Zee and TV Today reported 3.7 per cent and 1.1 per cent YoY revenue declines, respectively.
Zee's earnings before interest, taxes, depreciation, and amortisation (Ebitda) QoQ margin is expected to rise by 85 basis points (bps), while Sun TV and TV Today to fall by 100 and 535 bps, respectively.
According to the report, expect margin to be under pressure on content investments for Zee and Sun TV, driven by programming initiatives in Tamil and other genres, and TV Today, on lower YoY revenue and digital segment development, which may also witness the same strain.
Zee’s and TV Today’s YoY profit after tax (PAT) is estimated to decelerate by 46 per cent and 25 per cent, respectively. TV Today, as the report noted, is estimated to grow by nine per cent.
Exhibitors – Subdued Q2 hit by weak content
Multiplexes can experience a series of downgrades due to poor Bollywood content. Large-scale films with poor box office results like Laal Singh Chadha, Raksha Bandhan, Shamshera, and Ek Villain Returns were expected to drive strong Q2FY23 performance, but their failure hit revenue growth for mega-multiples operators PVR and Inox.
According to the report, Hindi box office revenue has noted a decline of 47 per cent compared to pre-covid levels in Q2FY23, as no film performed except Brahamastra (which recorded Rs 256.25 crore in domestic ticket receipts).
Domestic box office collections are expected to fall 41.5 per cent and 42 per cent sequentially, respectively, and 35 per cent and 34 per cent as compared to Q2FY20 for PVR and Inox.
Average ticket price (ATP) and spend per head (SPH), driven by premium content traction, have already outperformed Q2FY20 by 22 per cent and 24 per cent, respectively, in Q1FY23. On low-quality content, ATP/SPH may start getting soft, the report said.
It further highlighted that ad revenue recovery is delayed and may only revive to a pre-covid level in FY24 and added that this recovery is expected to recover to 60 per cent of pre-pandemic levels of Q2FY20.
PVR and Inox (including INDAS) are expected to have Ebitda margins of 11.6 per cent and 11 per cent, respectively, in Q2FY23, as screen additions may pick up in H2FY23.