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DTH cos may fare better than their print peers

Bapun Raz

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Analysts expect a slowdown in advertising
revenues of print media companies in the first
quarter this fiscal. Besides the seasonality factor, the
overall decrease in advertising spends will put a
break on the momentum of advertising growth of
print media companies, which garnered handsome advertising in the wake of IPL and festive seasons
in the last quarter of FY11. Analysts of various brokerages reckon that
advertising revenues and net profit of media
companies will grow around 20-30%, respectively
in the first quarter of the current fiscal on a year-
onyear basis. Their reading is that only companies
in the direct-tohome (DTH) segment and select general entertainment companies due to specific
developments will benefit largely vis-à-vis their
newspaper counterparts. In recent months,
domestic newsprint prices have firmed up due to
paucity of waste paper. Prices have risen to
over .`32,000 per tonne, a 15% increase in the year-to-date period. However, international newsprint prices have been
stable and have been hovering around $624 per
tonne from around $660 per tonne at the start of
the calendar year. This sharp increase in domestic
newsprint prices will eat into advertising revenues
of regional dailies, especially DB Corp and Jagran Prakashan, which depend substantially on
domestic newsprint. Also, growing competition among DB Corp,
Hindustan Media Ventures, and Jagran Prakashan
in the Bihar and Jharkhand regions is expected to
impact revenues of these players. These media
firms are expected to see a growth of 5-10% in
their advertising revenues in the first quarter on a year-on-year basis. English dailies, which import a substantial portion
of newsprint and have a forward inventory of 2-3
months, will see a lower erosion in advertising
revenues. Among English dailies, HT Media, which
has a forward inventory of 2-3 months and imports
most of its newsprint, should clock a growth of over 15% in advertising revenues. Overall,
revenues of print media companies are expected to
remain flat due to lower spending by companies in
the education sector. The contribution of the education sector to the
advertising revenue pie of print media companies is
12-15%. Companies, which have an exposure to
the general entertainment and DTH segments, will
continue to see a momentum in their advertising
revenues. Companies like Dish TV, Zee Entertainment Enterprise and Sun TV Network will
benefit from the rapid digitisation of their
subscribers' base. It is estimated that each quarter
the industry adds 2.5 million subscribers. Dish TV, which already has a subscriber base of
over 10 million and a market share of over 33%,
will benefit chiefly from this. These companies are
expected to post a growth of 10-15% in their
advertising revenues in the first quarter on a year-
on-year basis.


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