TV ad revenue growth hit by Cricket World Cup in Q3: Karan Taurani

The television industry continued to face challenges in the face of muted growth in advertising in Q3 due to high base last year and most of the ad spends being diverted to the Cricket World Cup (CWC), thus hitting general entertainment channel (GEC) spend, as per the latest report by Elara Capital.

Karan Taurani, SVP- Research Analyst (Media, Consumer Discretionary and Internet), Elara Capital, said, “Expect ad revenue to dip 1.5% YoY for Zee Entertainment versus a growth of 3% YoY and 4% YoY for Sun TV and TV Today respectively.”

He also pointed out that there can be moderation in subscription revenue QoQ due to the implementation of New Tariff Order 3.0 (NTO 3.0) two quarters ago (March 2023). Also, subscription revenue may grow 3.5% YoY and 4% YoY for Zee and Sun TV, respectively.

“For Sun TV and Zee, the absence of movie revenue may drag total revenue QoQ. Expect Zee’s EBITDA margin to dip 460 bps YoY in Q3FY24 ending at 9.0% due to the absence of movie revenue. And Sun TV’s EBITDA margin may also drop 190 bps YoY to 68.5%. Expect TV Today’s EBITDA margin to grow 250 bps QoQ to 8.0% due to absence of investments in digital platforms,” Taurani added.

While suggesting that there can be some respite for print and radio adex, Taurani said that DB Corp is expected to report consolidated revenue of Rs 6,432 million in Q3FY24 ending, up 9.7% QoQ and 14.0% YoY.

“We expect print advertisement revenue/radio advertisement revenue/print circulation revenue/digital revenue to grow 15% YoY/10% YoY/12% YoY/10% YoY, respectively in Q3E led by the festive season,” he added.

Expect EBITDA margin to increase 110 bps QoQ and 1,074 bps YoY due to softening of raw material prices. Expect a further correction in newsprint prices from FY25 ending, which may boost margin.

“Even though the radio medium has been struggling and remains the worst-hit in the post-COVID era due to consumers moving to the digital format, we expect Entertainment Network (ENIL IN) to report revenue growth of 10% YoY (on a high base) in Q3FY2E due to boost from the festive season,” Taurani said.

“Radio revenue may see a better recovery in Q1FY25, backed by the impact from election-related ad expenses. ENIL’s non-radio business may continue to see traction in the near term. We expect ENIL to post an EBITDA margin of 22% in Q3FY24 ending,” he added.      

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