Regulation and elections expected to drive ad revenues of media

TV networks to post double-digit growth, print 16-18% for 2013-14, driven mostly by regional newspapers

The media sector is expected to post a healthy growth in advertising revenues for 2013-14 because of new rules for television and the general elections.

Despite the reduction in advertising inventory on television due to a 12-minute cap imposed by the Telecom Regulatory Authority of India (Trai), television networks are expected to post double-digit growth in ad revenues. The capping of commercial airtime on channels has allowed networks like Zee Entertainment Enterprises and Viacom18 to charge a premium on advertising inventory, specially on their general entertainment and movie channels. According to street estimates, Zee is expected to post an ad revenue growth of 12-15 per cent.

Television has also benefited from extensive spending by parties. Sector estimates peg the political advertising on television at Rs 1,000 crore. News channels have benefited a great deal from political ads because the 12-minute cap does not apply to these.

The Supreme Court directed the Trai not to take coercive action against news channels for not following the advertising cap rule after the News Broadcasters’ Association (NBA) appealed against it.

In the case of the print media, the general elections have given a thrust to advertising, with parties spending 10 per cent of their Rs 2,000-crore budget on it. The sector is set to see ad revenue growth of 16-18 per cent, driven mostly by regional newspapers.

Brokerage firm Motilal Oswal said, “We expect strong double-digit advertisement revenue growth of 12-22 per cent for all media companies barring Sun TV, impacted by a year-on-year correction in inventory due to the Trai regulation. While growth is expected to be particularly strong at 20 per cent for Jagran Prakashan and Hindustan Media Ventures (on a low base), the momentum is likely to remain strong at 15-16 per cent for Zee and DB Corp. For Hindustan Times English, we expect advertisement growth to improve to eight per cent year-on-year (from six in the third quarter of 2013-14).”  

Television subscription revenues are expected to stay muted due to a slowdown in the gross billing in Mumbai and Kolkata. Zee, which saw a growth of 22.6 per cent in 2012-13, could see subscription revenues rising 13 per cent. The Subhash Chandra-led company is expected to post a revenue growth of 12.4 per cent.

Brokerage Edelweiss said, “We expect Zee to report an ad revenue growth of 12 per cent year-on-year in the fourth quarter of 2013-14 (against 15.5 per cent in the fourth quarter of 2012-13). Due to the high base and slow progress of digitisation, domestic subscription growth will be slightly muted at seven per cent.”

For print, the growth in subscription revenue on rises in the cover prices of publications helped offset the increase in cost of newsprint. Due to depreciation of the rupee, newsprint costs went up 15-20 per cent, offset by a same increase in the cover price and no reduction in subscription numbers.