Information and Credit Rating Agency (ICRA) estimates revenues for the print media industry to grow by 8 to 10 pc YoY in FY2024 supported by a rise in ad-spends by the Government in view of the upcoming General Elections and recovery in demand from key end-user industries (mainly FMCG and auto, currently ~25 pc below pre-pandemic levels).
Additionally, the easing in newsprint prices to ~USD 650/MT currently, which had touched historically high levels (USD 1,000-1,100/MT) in FY2023, is expected to support a 15 to 17 pc recovery in the players’ operating margins.
Ritu Goswami, Sector Head, Corporate Ratings, ICRA, said: “Though the revenues and margins are expected to improve sequentially in FY2024, structural challenges owing to competition from digital media will limit the medium-term growth potential. While ad volumes (insertions per day) reverted to pre-pandemic levels by end-2022, ad rates continued to lag due to weak demand from key end-user industries and shift in ad spends towards alternative mediums – mainly digital. In addition to the competitive ad rates vis-a-vis the print media (given the lower cost of production) digital media’s inherent benefits for advertisers such as flexible formats, personalised targeted campaigns, monitoring of real time reader data, etc. had led to the shift in their ad budgets towards this medium. On the supply side, newsprint supply is expected to remain a challenge owing to the growing environmental concerns, closure of several paper mills during the pandemic and shift in production by several players from newsprint to other grades of paper (like packaging paper) and is likely to keep the newsprint prices above the historically average levels. Industry margins are, therefore, unlikely to see pre-pandemic levels (of over 20 pc) over the medium term.”
As per ICRA’s analysis of 10 print players representing around 30 pc of the industry size, the circulation revenues of the industry had reached around 90 pc of the pre-pandemic levels in FY2023 (estimated figures), largely driven by the increase in cover prices, as the number of copies in circulation remained significantly low vis-à-vis 2019 levels. Ad revenues, at ~80 pc of FY2019 levels in FY2023, have been more gradual to recover.
On the cost side, the Russia-Ukraine war aggravated the newsprint supply issues and led to significant escalations in newsprint prices (Russia being a major supplier of imported newsprint to India) and adversely impacted the industry’s operating margins (YoY decline of ~600 bps in FY2023e).
“Most print media companies have low leverage, and an expected improvement in operating margins during FY2024 should result in improved coverage metrics for the industry participants in FY2024,” added Goswami.
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