Print media revenue expected to grow 35% in FY22, still below pre-pandemic levels
Strong cost rationalization measures and digitization of content will lead to a recovery in profitability to 9-10%, according to the rating agency
said, admitting the bottom line will rise despite newsprint prices rising 20-30% over the past six months.
The agency, which rates companies accounting for 40% of industry revenue, said the credit profiles of large print companies will be resilient, cushioned by healthy cash and strong balance sheets, while for others, management cash will be crucial. .
“The second wave impacted ad revenue last quarter as it is highly correlated to economic activity. We expect ad revenue to recover from the current quarter as the virus recovers. economic activity,” said its director Nitesh Jain.
Regarding subscription revenue, the sector is experiencing a structural shift amid a shift in consumer preference towards digital news, from physical newspapers, the agency said, adding that this is more important for newspapers. English, which have a higher share in metros and Tier 1. cities, where digital adoption is also higher.
“In terms of subscription revenue, the industry is experiencing structural change amid shifting consumer preference for digital news from physical newspapers”
English newspapers are focusing on monetizing content by putting premium news behind paywalls and pushing digital subscription alongside print subscription, he said.
Non-English newspapers, on the other hand, saw relatively resilient subscription revenue even in the first wave due to their strong roots in the hinterland, he said, adding that the overall loss of revenue subscription in FY22 will be limited to 12-15 percent. from the pre-pandemic level.
Contrary to the experience of Western countries, print media will remain popular in India due to factors such as low cover price, ability to deliver original and credible content, and people’s habit of reading physical newspapers.
Newsprint accounts for a third of print companies’ total costs, he said, adding that there had been an increase of up to 30% in newsprint prices over the past six months.
Despite rising costs, operating margin is expected to reach 9-10% this fiscal year, down 1-2% from the pre-pandemic low in fiscal 2020.
The analysis assumes that the impact of the second wave will continue to wane, as currently seen. Any subsequent resurgence of infections this fiscal year and its impact on economic activity therein will be controllable, the agency added. AA MKJ