Covid-19 may slash media, entertainment sector FY21 revenue by 16%: Crisil Ratings

By: |
Published: May 12, 2020 7:45 AM

The overall revenue loss of Rs 25,000 crore will translate into “significantly” lower profits for companies despite cost-cutting measures, analysts at the firm said.

Covid-19, coronavirus pandemic, Crisil Ratings, entertainment sector, FY21 revenue, Box Office collections, advertisement revenuesCrisil said, given the low base this FY, next fiscal year is estimated to see revenue grow by 18%-20%.

The economic downturn, aggravated by the coronavirus pandemic, is expected to slash Indian media and entertainment industry’s revenue by 16% or Rs 25,000 crore to Rs 1.3 lakh crore in the current financial year, stated a report released by Crisil Ratings on Monday.

The overall revenue loss of Rs 25,000 crore will translate into “significantly” lower profits for companies despite cost-cutting measures, analysts at the firm said.

While the advertisement revenues that account for 45% of the total pie are likely to see a cut of about 18% in FY21, subscription revenues will see a comparatively moderate cut of around 14%. Subscription revenues contribute around 55% to the total revenues. “In digital, it (the ad revenues) will continue to grow but at a slower pace. Sans digital, the overall decline would be worse at nearly 25%,” said Sachin Gupta, senior director at Crisil Ratings.

The resilience of the digital segment can be linked to the increasing use of devices and applications. The ad revenues for television have been hit due to lack of fresh content and postponement of major sporting events such as the Indian Premier League (IPL). Subscription revenues for TV, nonetheless, have remained healthy even during the lockdown, the report said.

Total subscription revenues will come under threat due to a sharp fall in Box Office collections — a major driver in this revenue category — along with TV and print segments.

“Given the sharp reduction in revenues, debt protection metrics will certainly weaken this fiscal for media and entertainment companies. Multiplexes that have had strong credit profiles will see credit pressure aggravating because of a longer road to recovery,” said Nitesh Jain, director at Crisil Ratings.

Crisil said, given the low base this FY, next fiscal year is estimated to see revenue grow by 18%-20%. The analysis is based on 78 companies rated by Crisil.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Chennai-based beverage start-up Chai Waale bags funding of Rs 1.75 crore
2Gas-based power plants seek to bid under renewable bundling scheme
3IndusInd Bank records 4% loan growth till June 30