Magic of media | Value Research The changed political environment spells good news for media, with the industry posting double-digit revenue growth in a subdued economy

Magic of media

The changed political environment spells good news for media, with the industry posting double-digit revenue growth in a subdued economy

Magic of media

A charged political environment is good news for newspaper companies. It means more ads from rival political parties as each sets out to outdo the other. It's no surprise then that the media sector has seen the second highest revenue growth (after technology). Not many industries can boast of a double-digit revenue growth in the otherwise subdued economic environment.

Jagran Prakashan Up on ads

Jagran Prakashan is the publisher of Dainik Jagran, counted as the most-read newspaper in the world.

In the first half of the current year, Jagran reported an accelerated advertisement revenue growth of 8 per cent as compared to the 5 per cent a year ago. Industries that contributed to the ad growth in the latest quarter include the resurgent automobile sector, white goods and e-commerce sites.

The publishers other papers, Nai Duniya and mid-day, which had reported losses for the past two years, have turned black. These two papers which resulted in losses to the tune of ₹29 crore in FY14 and ₹4 crore in FY15 reported an operating profit of ₹7 crore in Q2.

Print-ad revenues are also dependant on government advertisements, real-estate and education sectors. A steady improvement in the economy is likely to boost ads from these sectors as well. Jagran Prakashan is likely to report revenue and EBITDA growth of 14.9 per cent and 24.9 per cent CAGR, respectively, between FY15 and 17, says a report by ICICI Securities. Given how charged the environment has become and our penchant for soaps, this industry looks like a long-term performer.

Zee Entertainment Enterprises Ads, drama, action

We Indians love our daily soaps. This is something broadcasters like Zee are exploiting. The launch of Zee's &TV has bolstered ad revenues by 35 per cent (YoY) in the latest quarter. What also pitched in the strong ad growth was the company's improved market share in regional channels and an improving industry dynamics. Even excluding the launch of &TV, Zee saw robust ad growth of 26 per cent (YoY) in market-share gains and higher pricing. As in print media, e-commerce sites and FMCG companies lead ad growth from the front.

The company though did suffer from some hiccups - startup losses arising out of &TV resulted in EBITDA margins crashing about 650 basis points (YoY) to 28 per cent in Q2. The company has guided margins of 25 per cent this year. On the plus side, the sports business has remained in black as it has for the past three quarters.

Continued momentum in ad growth, with upcoming 4G launches and further digitisation in Phases III and IV, says a report by Motilal Oswal, is expected to result in earnings per share growth of 25 per cent CAGR between FY16 and FY18. Zee's good show looks set to continue.

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