The fourth quarter of the financial year 2010-11 (Q4FY11) ended March 31, presented a tale of contrasts for the media and entertainment (M&E) industry in India.
The $587-billion industry, dependent on advertising for nearly 38% of its revenues, was largely hit due to the shrinking ad budgets of firms across sectors. Most media companies are expected to post a weak Q4, with the ICC World Cup 2011 taking a toll on the revenues of general entertainment channels (GECs) and print firms reeling under strict ICC regulations on advertising. The sector is likely to post a 17% year-on-year (y-o-y) growth but a 8.4% quarter-on-quarter (q-o-q) decline.
A report from Motilal Oswal Securities indicates that the core profitability of all GECs will be affected due to the World Cup. Leading GECs including Star Plus, Colors and Sony witnessed an average 10% drop in their GRPs in fourth quarter.
For print companies, the rising cost of newsprint was a major roadblock. ?Cost pressures continue to pinch print firms, as there is a spurt in the price of newsprint. Increased circulation of copies will further contribute to cost inflation,? said an analyst. In the film production space, companies like Eros International is expected to post weak revenues, owing to the lack of any successful release during the quarter, a report by Kotak Securities said. The impact of the World Cup will also be felt on their topline. However, the overall outlook for the industry is positive and it is estimated to grow at a rate of 13% in the next fiscal.
In contrast to the performance of GECs and print media, cricket that dominated the quarter, spelt huge success for sports broadcasters, news channels and direct-to-home (DTH) service providers. Dish TV is likely to see a 2.8% q-o-q growth in ARPUs (average revenue per user) and a 20% growth in EBITDA, owing to strong subscriber addition during the quarter. For Sun TV Network, ad revenue growth will decline by 2% compared with the last quarter, but subscription revenues are likely to rise by 5% q-o-q.