Print publications are expected to reach 75% of pre-Covid revenues in FY22
The newspaper and magazine business, which suffered in 2020 as a result of the pandemic, may not recover completely in FY22. As per a Crisil Ratings report, India’s print industry will reach only three-fourths of its FY20 revenue mark in FY22 despite 35% year-on-year growth. The report also estimates that the sector’s subscription revenue loss this fiscal will be restricted to 12-15% of the pre-pandemic level.
As per the 2021 FICCI-EY report on media and entertainment, print advertising revenues fell 41% in CY 2020 while subscription revenues declined by 24%. In 2019, the print industry was worth Rs 29,570 crore; this dropped to Rs 18,990 crore in 2020 and is likely to rake in revenues worth Rs 23,710 crore in 2021. Further, PwC’s Global Entertainment & Media Outlook 2021-2025 suggests that the industry is estimated to have a CAGR of 1.82% until 2025.
The second wave temporarily halted the recovery of the industry. Publishers are confident that the second half of the year is going to enable a revival.
The second wave of the pandemic saw advertisers tightening purse strings, with circulation also being impacted. Satyajit Sengupta, chief corporate sales and marketing officer, Dainik Bhaskar Group, observes, “The first quarter of FY22 has been slightly impacted due to lockdowns in our legacy markets of Madhya Pradesh, Chhattisgarh, Rajasthan and Gujarat during the second wave.”
According to Sengupta, the publication has reached around 90% circulation of pre-covid levels. “We are currently just missing some upcountry copies due to the railways still not fully functional,” he adds.
MV Shreyams Kumar, MD, Mathrubhumi, says that despite Kerala having lockdowns, markets are reopening and the initial signs of recovery are encouraging as consumption has resumed.
Advertising revenue, too, is trickling in. In January 2021, DB Corp reported that the company’s advertising revenues had reached 87% of Q3 FY20. Jagran Prakashan’s ad revenues for FY21 amounted to Rs 739.30 crore as compared to Rs 1,217.71 crore in FY20. Circulation revenues declined from Rs 403.52 crore in FY20 to Rs 316.67 crore in FY21. As per Crisil, profitability in the sector is estimated to be about 9-10% because of the stringent cost rationalisation measures companies have put in place.
Digital in focus
The meagre growth estimates for the industry indicate that publishers will remain focussed on cost control and maintaining the already slim profit margins. “We expect greater operational consolidation in the industry, and implementation of various strategies including digitisation to rein in costs,” says Rajib Basu, media and entertainment leader, PwC.
Among English newspapers, a structural shift in consumer preference towards digital news is being observed, as per Crisil Ratings. Some English dailies have already put premium content behind a paywall, established digital verticals that operate only on through paid subscriptions, etc. But the uptake is slow. Manish Gupta, senior director, Crisil Ratings, points out that digital subscription revenue is estimated to account for less than 10% share of the total subscription revenue of print media companies.
Analysts say publishers need to double down on this revenue stream to capitalise on digital news consumption.“Print circulation is growing at a CAGR of 0.6% until 2025. Whereas digital newspaper circulation is expected to grow by 12.76% during the same period,” he estimates.
Gupta says that the share of digital subscription revenue in overall subscription revenue, however, will remain below 15% over the medium term. There is greater opportunity, therefore, in extracting advertising revenue from digital publications.
“The low cover price of newspapers in India means that ad revenue accounts for about 70% share of overall print revenues. Therefore, attracting digital ads could be easier than monetising digital content through subscription,” says Gupta.