Elections to boost print media revenue by 15% this fiscal

An uptick in government spending on advertisement in view of the upcoming state and general elections and higher spending on ads by corporates, especially in FMCG sector, are expected to boost Indian’s print media revenue by around 13-15 per cent to Rs 30,000 crore this fiscal, as per a CRISIL Ratings report.

Apart from the surge in advertisement revenue, the print media sector is also likely to benefit from the decline in newsprint prices. The sector’s profitability is estimated to surge by1000 basis points (bps) to 14.5 per cent during the year.

Advertisement accounts for around 70 per cent of the print media revenue in India while the remaining 30 per cent come from subscription fees. The sector was badly hit by Covid-19 pandemic, which led to around 40 per cent slump in revenue during the financial year 2020-21. However, the industry bounced back with a 25 per cent jump in revenue during the fiscal 2021-22 and 15 per cent growth during the year 2022-23.

With around 15 per cent growth, the revenue of the print media sector is estimated to reach the pre-pandemic level this fiscal.

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Naveen Vaidyanathan, Director, CRISIL Ratings, said, “steadfast domestic demand for fast-moving consumer goods, retail, clothing and fashion jewellery, launches of new automobiles, rising preference for higher education, online shopping and growing real estate sales — sectors that contribute about two-thirds of the print media ad revenue — will keep the momentum in ad revenue growth going.”

“Higher ad spends by the government, which contributes a fifth of the sector’s ad pie, in the wake of the upcoming elections will also push growth,” he added.

Subscription revenue, which increased in the range of 8-10 per cent in the past two fiscals, is expected to grow 5-7 per cent in the current financial year, largely led by moderate revisions in cover prices.

However, subscription growth has a bearing on the profitability of print media companies because of increased requirement of newsprint, the key raw material for production of newspapers.

India imports more than half of its total newsprint requirement. Russia is a major source. Russia-Ukraine conflict led to a surge in newsprint prices in 2022.

“The steep surge in newsprint prices sheared 850 bps off the operating margins of print media companies to 4.5 per cent last fiscal even though revenue increased,” said Rounak Agarwal, Team Leader, CRISIL Ratings.

However, newsprint prices have come down in recent months, correcting as much as 15-20 per cent from the peak last fiscal, owing to modest global demand and easing of supply chain issues. This, along with revenue growth, should shore up margins by 1,000 bps to 14.5 per cent this fiscal on a low base of last fiscal, Agarwal said.