Media - Lukewarm Sales Growth; Result Preview Q3FY15 :: Edelweiss, link

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For Q3FY15, we expect our media universe to clock 4.1% YoY (7.8% YoY in Q2FY15) growth in revenues, while EBITDA is expected to rise by 2.9% YoY (2.5% YoY in Q2FY15). Both TV and print maintained Q2FY15 ad growth trajectory of 11-12% and 9-10% YoY, respectively. We expect like-to-like (LTL) footfall growth of 1-2% YoY in Q3FY15 for multiplexes as compared to 14% YoY decline in H1FY15. We expect our coverage companies to register EBITDA margin expansion, except the MSOs. EBITDA margins of MSOs are expected to be hit by drop in carriage revenues, activation revenues and high content costs due to STAR`s RIO deal. Hence, instead of 164bps YoY dip in margins in Q2FY15, we expect our media universe to log 35bps YoY drop in Q3FY15.

Sales growth to be subdued in Q3FY15...

Ad spends across TV, print and radio were buoyant in October, aided by early Diwali. However, in November and December ad spends were soft due to lower ad spends by key sectors like FMCG. ZEE had reported 34.3% YoY overall ad growth in base quarter aided by India-South Africa series, new channels and movie premieres. On this high base, though non-sports ad growth would be ~12% YoY, reported ad revenue would decline by 2% YoY. For Sun TV, in spite of low base, market share pressure in some markets could result in 6-7% YoY ad growth. Dish TV is expected to add 0.35mn net subscribers. We expect Dish TV`s ARPU to rise by INR3 QoQ to INR175 gaining from the price hikes undertaken in June and August. Despite worst LTL footfall growth in November in past 4-5 years, multiplexes are expected to report 1-2% YoY LTL growth in footfalls for the quarter cushioned by strong footfalls in October and December.

...but margins likely to improve, except for MSOs

A favourable base will aid YoY margin expansion for Sun TV, Dish TV and PVR. We expect ZEE to post lower sports loss of INR150-200mn (INR1bn loss in Q3FY14) in turn aiding margin expansion. Lower competitive intensity (no price wars, less promotions) during the festive season bodes well for Dish TV`s margins. Declining newsprint prices will bolster margins of print companies. Out of the estimated ~INR430mn annual loss in Indian Super League, we expect DEN to report ~INR300mn loss in Q3FY15 alone.

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https://www.edelweiss.in/research/Media--Lukewarm-Sales-Growth;-Result-Preview-Q3FY15/27955.html