TV broadcasters' margins to rise 300 bps to 15% by 2027 amid digital growth: Crisil

New Delhi: According to Crisil, television broadcasters' operating margins are set to increase by 300 basis points, reaching 15% by 2026–27, driven by expanding digital offerings and improved economies of scale.

According to a Crisil report that analysed TV broadcasters accounting for 90% of the industry revenue, television players may see their profitability inching closer to the pre-pandemic levels. 

The report, however, mentioned that the uptick largely depends on the advancements that TV broadcasters make to compete with other digital platforms, and adapting to the rapidly shifting consumer preferences. 

With the internet penetration getting deeper, the momentum of digital is eventually going to benefit the broadcasters. But, the traditional liner broadcasting is untouched by this whiff. As a result, Crisil has noted that the “revenue from traditional linear broadcasting is expected to be stable or fall marginally.” 

Highlighting that broadcasters are gearing up in the digital realm with their own digital platforms (for content such as live sports and news), the report mentioned that the digital segment is aiding the advertising revenues of TV broadcasters. The sectors contributing to this phenomenon are fast-moving consumer goods (FMCG), automobiles, e-commerce and real estate. 

Summarising the data, Ankit Hakhu, Director, Crisil Ratings, said, “Digital revenues of these broadcasters grew ~15% on average over fiscals 2022-2025 and will continue to grow at double-digits over the next two fiscals. With the linear broadcasting segment nearly flat, this will increase the revenue contribution of digital to ~25% by fiscal 2027.” 

Adding to it, Varun Marwaha, Associate Director at the rating agency, said, “The ability to utilise their content for digital offerings is leading to amortisation of content cost over a wider consumer base and economies of scale in operating costs. As a result, the operating margins of broadcasters are expected to inch closer to the pre-Covid level of 16-18% over the next two years.”

The report, towards the end, pointed out the dependability and subjectivity of the data. It noted, “Going forward, revenue growth and return generation may be subject to competition from digital platforms and shifts in consumer behaviour patterns.”