TV industry stares at strong recovery in H2FY24: Elara Capital

TV industry performance remained muted in the first half of the financial year 2023-24 primarily due to a weak ad environment, with little respite due to higher subscription revenue on the back of NTO (New Tariff Order) price hike.

However, a strong rebound is expected in H2FY24 driven by new launches and the festive season, according to Elara Capital’s Q1FY24 preview report on the media and entertainment industry.

Muted ad environment drags performance

TV ad revenue is estimated to be muted due to lower spending by new age and e-commerce firms, muted growth in FMCG companies on RM inflationary pressure and weak consumer demand, according to the report.

“Expect a strong uptick in H2FY24 backed by new launches/festive. We expect ad revenue to dip 7% YoY (year-on-year) for Zee Entertainment and increase 1.4% YoY and 2.5% YoY for Sun TV Network and TV Today respectively. We expect Zee’s subscription revenue to grow 2% QoQ (quarter-on-quarter) and 12% YoY and Sun TV’s to grow 3.0% QoQ and 2.8% YoY,” the report stated.

“The full impact of the NTO price hike in the range of 6-8% is expected to come in H2FY24, largely in line with our expectations, as we don’t foresee a double-digit price hike for TV,” it added.

For Sun TV, IPL revenue would constitute 38% of total revenue in Q1, as this is the first-year post-media rights renewal. EBITDA margin is expected to dip 510bp (basis points) YoY in Q1FY24E for TV Today due to digital investments but grow 230bp YoY for Zee (due to lower movie-related expenses) and 350bp YoY for Sun TV (backed by IPL revenue). EBITDA margin for Zee may see an uptick (QoQ) (230bp), due to the absence of ILT20 and movie-related investments (Rs 1.5 billion).

Some respite in radio revenue

The radio medium has been growing slowly compared to other forms, due to consumers seemingly moving toward the digital format.

“We expect Entertainment Network (ENIL) and Music Broadcast (MBL) to report revenue growth of 8% YoY and 15% YoY, respectively. ENIL’s non-radio business may continue to see traction in the near term. We expect ENIL and MBL to post an EBITDA margin of 14.7% and 13.0% in Q1FY24E,” the report read.

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