print revenue: advertising pressure to help print revenue grow 25% in FY23, but profits will be hit by rising newsprint prices: report

A jump in advertising could lead to up to a 25% increase in print revenue in FY23, but pressure from rising newsprint costs due to Russia’s invasion of the will affect profitability, according to a report published on Tuesday.

Operating profit margins for print media players may shrink by up to 3 percentage points in FY23, according to the India Ratings and Research report.

The agency said about 60% of newsprint used in FY21 was imported and added that since the invasion began in late February, prices for imported newsprint have jumped up to 80%. and could increase further in the next six months due to the lack of imports.

A gradual increase in supply from domestic sources, during a long period of no imports, should keep prices under control, he said, adding that in the first ten months of the fiscal year 22, before the war, imports accounted for about 52 percent. cent of the total newsprint consumed, which was the lowest in a decade.

In FY21, Russia accounted for the highest share of this figure at 38%, followed by Canada at 26%.

In FY21, newsprint requirements were cut nearly in half to approximately 1.1 million tons, following lower circulation volumes and low paging after the COVID-19 outbreak. 19, the agency said, estimating the same increased slightly in fiscal 22.

“While a recovery in circulation volumes and higher advertising volumes will lead to an increase in newsprint consumption in FY23, it is unlikely to return to levels of around 2.1 million. tonnes (FY20), given the substantial decline in traffic volumes in FY21 and a slower recovery in FY22,” he added.

However, on the bright side, there are factors that will also help reduce the impact on profit margins, the agency said, pointing to increased advertising revenue, stockpiling imported newsprint at lower cost in the recent past and cost optimizations.

He said that print media players derive about two-thirds of their overall revenue from advertising revenue, while broadcast revenue and other operating revenue make up the remaining third. Therefore, advertising revenue is directly linked to economic activities and growth.

Considering the overall growth in economic activities and the increase in advertising spending by key sectors, advertising revenues are expected to increase by 25-30% in FY23, while broadcast revenues will increase by up to 12 %, he said, adding that this will result in an overall revenue growth of 20-25%.

English print media players’ revenue growth could remain elevated in FY23, mainly due to the base effect, as they were significantly impacted in FY21 compared to Hindi and vernacular print media, he added.

The agency estimated FY22 revenue increased about 20%, led by a rebound in ad revenue of about 25% and broadcast revenue up about 10%.

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