ICRA: Film exhibition segment on rough road; some recovery in sight for the print media and television broadcasting segments


The outbreak of Covid-19 pandemic followed by multiple lockdowns has severely impacted the revenues of the domestic media and entertainment (M&E­) industry, including film exhibition, print media and TV broadcasting segments. The film exhibition industry is going through its worst phase ever due to the impact of pandemic and  ICRA expects an 80-85% Y-o-Y contraction in revenues in FY2021 for the industry players.  Such a pronounced revenue decline will lead to operating losses for the film exhibitors, though the industry’s (multiplexes)[1] monthly cash burn will reduce from Rs. 57 crore in H1 FY2021 to Rs. 25-30 crore in H2 FY2021 supported by a sequential uptick in revenues and increased cost rationalisation. According to Ms. Sakshi Suneja, Assistant Vice President, ICRA, While cinema operations have started in most states with 50% of their capacities, the occupancy levels at multiplexes are at present very low, at mid-single digit percentage levels (of the permitted capacity).The occupancy levels will remain subdued during the balance four months of FY2021 as the consumers are likely to stay away from enclosed places, amid rising cases of Covid-19 infections. While over-the-top (OTT) platforms shall remain the preferred mode of release of small-to-mid-sized budget films during FY2021, producers of large budget films are expected to defer their releases to Q1 FY2022 and beyond. In the absence of fresh content, advertisement revenues will also remain muted.” In so far as the print media segment is concerned, the same is expected to witness a 30% Y-o-Y decline in revenues in FY2021. However, the good part is that with effect from July 2020, there has been a month-on-month recovery in newspaper circulation and this will eventually recover to pre-Covid levels by Q4 FY2021. Advertisement revenues have picked up well in Q3 FY2021, led by festive season demand, with most entities also witnessing an uptick in ad-rates. Overall, the advertisement revenues will improve sequentially, though will be lower by 7-8% on a Y-o-Y basis in H2 FY2021. ICRA expects the operating profit margins (OPM) of print media entities to be supported by savings in newsprint costs, thus witnessing a lower contraction by up to 200 bps Y-o-Y in FY2021.

The television (TV) broadcasting industry is likely to witness a Y-o-Y decline of 15-20% in revenues in FY2021.This stands slightly revised upwards from rating firm’s  earlier estimates of a revenue contraction of 18-25% in FY2021, given the higher-than-expected growth in subscription revenues in H1 FY2021 and stronger Y-o-Y recovery in advertisement revenues since Q2 FY2021. Adds Ms. Kinjal Shah, Vice President, ICRA,  “Subscription revenues for TV broadcasters will hold steady in H2 FY2021 as consumers are likely to continue their TV viewing amid limited outdoor avenues of entertainment. Overall, subscription revenues are expected to witness mid-single digit revenue growth in FY2021. Advertisement revenues witnessed a good traction during the festive season and will witness a strong recovery in H2 FY2021 (vis-a-vis H1 FY2021), as economic activity and growth improves; however, the same will be lower by 5% on a Y-o-Y basis. Given the 25% revenue decline in H1 FY2021 and the anticipated Y-o-Y revenue decline in H2 FY2021,  we expect the OPM of TV broadcasters to contract by 400-500 bps in FY2021. Profitability pressures may also arise due to the increasing investments in content necessitated by increased competition from digital platforms.” Given the above scenarios, ICRA has maintained its negative credit outlook for the film exhibition, print media and TV broadcasting segments of the Indian M&E industry. While the credit metrics of film exhibitors will weaken materially in FY2021 due to the pandemic, the  credit metrics of entities involved in print media and TV broadcasting segments will see  a moderate impact


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