KOLKATA: The pandemic has led to a significant plunge in revenue for the media and entertainment sector during fiscal 2021 (FY21). After contracting 26 per cent in this financial year, M&E sector revenue is expected to rebound by 27 per cent to Rs 1.37 lakh crore in fiscal 2022 (FY22), according to the credit rating agency Crisil. The time to bounce back to pre-pandemic levels will be relatively shorter for segments such as digital and television, while print, films, outdoor, and radio would take longer.
Credit profiles of large media companies would be unaffected due to strong balance sheets, liquidity and the revenue rebound, while mid-sized and small ones could see stress, an analysis of over 80 of them rated by Crisil Ratings shows.
Crisil Ratings Ltd director Nitesh Jain said, “Advertisement and subscription revenues contribute nearly equally to the overall M&E sector’s topline, but since the former correlates strongly with economic growth, the pandemic has had a bigger impact on it. Next fiscal, with strong economic rebound on the cards, ad revenue should grow 31 per cent on-year and subscription revenue 24 per cent.”
The TV segment – contributing around half of the sector’s topline – has recovered fully and will report healthy growth next fiscal. Ad revenue saw a sharp contraction initially, but recovered swiftly thereafter, aided by airing of new content, sports events such as the Indian Premier League and a buoyant festive season. As for subscriptions, TV was resilient even during the peak of the pandemic as people remained indoors, the report added.
The print segment – contributing a fifth of the M&E sector topline – is recovering, though at a much slower pace, and should be able to rebound fully only by the end of next fiscal. Print is losing share in ad revenue mainly to the digital segment. Circulation too, especially for English language, could see a loss of eight-ten per cent, because of increased preference for e-papers in metros. However, print companies are rebooting their cost structure and accelerating digital adoption to stay relevant.
Films – contributing a sixth to the sector topline – is one of the most impacted segments. But occupancies in theatres should improve with the vaccination rollout and a strong pipeline of content. However, this segment is likely to remain impacted even next fiscal due to social distancing norms and fear of closed spaces.
Other traditional media – radio and outdoor – are under persistent distress, and will likely take much longer to recover. This is because commuting as well as ad budgets for micro, small and medium enterprises – the key drivers for these segments – will remain restricted even in FY22.
Crisil Ratings Ltd associate director Rakshit Kachhal said, “Digital has emerged as the medium of choice. The pandemic accelerated adoption of OTT platforms, online gaming, e-commerce, e-learning, e-papers and online news platforms. This has meant the focus of advertisers has shifted from traditional to digital media. We expect the digital segment revenue to grow 14-16 per cent annually over the medium term. Its share of M&E sector revenue is expected to double to ~20 per cent by fiscal 2024 compared with last fiscal.”
