Negative credit outlook for film production, print media and television broadcasting: ICRA

Credit rating agency ICRA said on Thursday that the credit outlook for the motion picture production and exhibition, print media and television broadcasting segments is negative due to the impact of the coronavirus pandemic, while that they are stable for operators of distribution platforms and over-the-top platforms. Observing that the impact of COVID-19 on India’s media and entertainment (M&E) industry is a mixture of pain, hope and opportunity, he said the pandemic has had a varied impact on the sector. .

The sector includes the segments of film production and exhibition, print media and television broadcasting (TV), as well as distribution platform operators (DPO) and over-the-top platforms (OTT) .

ICRA said it has a negative credit outlook for the film production and exhibition, print media and television broadcasting segments of India’s M&E industry.

“Besides the direct impact in the form of lost sales due to the closure of cinemas, given the negative impact on the overall economy, a sharp reduction in advertising expenditure was observed in April and May 2020, and expected to continue over the short term.

“This, in turn, will reduce the revenues and profit margins of the aforementioned segments of the Indian M&E industry in the financial year 2021,” he said.

CIFAR Deputy Vice President Sakshi Suneja said: “Movie theaters were the first to close, even before the lockdown began, and are expected to be among the last segments to see relaxations. This segment will experience therefore a total loss of revenue in Q1 fiscal 2021.”

Even after theaters resume operations post-lockdown, occupancy is expected to remain below normal as consumers, as a precaution, are likely to stay away from crowded places, she added. .

ICRA said it expects credit metrics for players in the film production and exhibition segments to weaken significantly.

For the print media segment, circulation revenue was negatively impacted by around 40% on a yearly basis (YoY) in April 2020, amid distribution challenges due to ongoing lockdown restrictions.

“Furthermore, advertising revenue, which was already under pressure in fiscal 2020 amid sluggish economic conditions, was down approximately 60-70% year-on-year in April 2020. Advertising revenue was also negatively impacted. for the TV broadcast segment in April 2020,” he said.

In contrast, the rating agency said it has a stable outlook on DPOs and OTT platforms.

“The impact of the pandemic on DPOs will be limited as subscribers are expected to maintain their current subscription plans. either the same is expected to resume once lockdown restrictions are relaxed.

“Prolonged lack of fresh content from TV broadcasters, however, may increase subscriber churn from DD Free Dish,” he added.

He further said that the current lockdown has led to an increase in the consumption of OTT platforms as consumers stay at home.

“While currently OTT platforms have a business model dominated by advertising revenue, the current crisis offers an opportunity to increase the proportion of paid subscriptions, thanks to the new habit of OTT viewing at home”, he said. he declares.

Additionally, with the closure of movie theaters and the expected aversion to outdoor movie viewing, movie producers are considering OTTs (especially large platforms) for their movie releases.

A shift in advertisers’ preference towards online platforms over linear platforms is also expected as they try to attract more attention, especially after the postponements and cancellations of various sports programs that were scheduled to air on television. .

“OTT platforms, however, are also facing a drying up of fresh, quality content. Platforms with a large content library are therefore better placed to grow subscribers during the current crisis” , did he declare.

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