Ind Ra gives stable outlook for print media, broadcasters, MSOs for FY22

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India Ratings and Research on Thursday gave a stable outlook to print media, broadcasters and multi-system operators for FY22, driven largely by expectations of demand recovery as the economic conditions improve.

The agency, a division of Fitch Ratings, maintained a negative outlook for the multiplex sector, given the delayed recovery curve and continued low attendances hampering cinema operators. It anticipates a weak demand recovery for movie exhibitors, which have been impacted because of the pandemic.

Advertising revenues are growing for the broadcasters and print media since the second half of FY21 which bolsters the near term outlook, it said.

Print media will continue to face challenges from digital initiatives cannibalising circulation, which would necessitate companies investing in online ventures themselves, the agency said.

In the case of MSOs (Multi-System Operators), it said such companies should see stable revenue growth and improved operating profit generation as work-from-home initiatives have meant an increased demand for broadband services. This should further boost MSOs' financial profiles.

The over-the-top companies were able to debut new movies on their digital platforms and given the expected weak demand recovery for multiplexes, exhibitors will likely have to contend with over-the-top platforms as producers and film-houses look to maximise returns in a weak macro-economic environment.

Exhibitors are also exploring shared-lease rental models with mall developers, which could impact margins and scalability, the agency said, adding that if demand returns to pre-COVID levels, exhibitors will remain the preferred medium for watching movies as well as the best option to generate the highest box-office returns.

The lockdown has led to MSOs largely shifting to online collection models, which should reduce the use of fund-based limits and thus improve credit profiles.

Given the threat of digital news ventures, print media companies have invested in digital versions of their established publication to maintain market share. However, these companies rely heavily on advertising revenues, which are closely linked to the macroeconomic environment, the agency said.

While ad revenues have certainly picked up in H2FY21, any weakness in the operating environment in FY22 on account of new lockdowns or slow pick-up in vaccinations, could lead to deterioration in the financial profiles of print media companies, it added.