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Media (Healthy ad growth to continue) Positive
Post economic turmoil in FY09, the media sector has registered a healthy
growth in H1FY11. The trend is expected to continue in FY12 as well. Major
corporate have augmented their advertisement budget to keep pace with
higher economic growth. National level advertisers, which had seen
negative/stagnant ad growth, are expected to join the growth bandwagon
along with regional players this year. Margins across the sector are
expected to improve slightly with operating leverage coming into play.
⇒ National level advertisers are expected to catch up partly due to a
reduced base. However, regional players would continue to
outperform with 14.5% ad revenue growth (I-Direct universe coverage)
as against their national counterparts (10.6% ad revenue growth) in
FY12 with consumption increasing in smaller towns and cities
⇒ We expect to see heightened competitive activity in the Hindi print
media with the launch by DB Corp in Jharkhand and expected launch
in Bihar in this year. The impact of firming newsprint prices
($664/tonne in Q3FY11 as compared to $643/tonne) and higher
competition should be set off by the expanding advertisement pie. We
expect print companies to maintain stable margins in FY12
⇒ With the government’s push, the digital cable distribution industry has
seen unprecedented growth (~26 million in December 2010 from 17
million in December 2009). We expect the pace to get augmented this
year. With increasing DTH penetration, we expect Dish TV to be the
frontrunner among beneficiaries. Broadcasters are also likely to benefit
by plugging subscription revenue leakages from undeclared
subscribers
⇒ Growth in multiplexes would be volume driven with total number of
properties under operation (I-Direct universe) increasing from 88
currently to ~110 by FY12, mostly in Tier-II cities. However, occupancy
levels are expected to remain stable at ~29-30%
⇒ Print companies like Jagran Prakashan and HT Media with regional
exposure and relatively subdued valuation (trading at 14.5–16.5x one
year forward multiple as against four year average of ~21x) and Dish
TV with government led digitisation thrust, would stand out in the Idirect
media universe
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