Chennai: Growing advertising revenues and softening newsprint prices are aiding healthy growth of regional print media.
Buoyant growth in advertising revenue, driven by strong localised demand from key advertising sectors, together with a loyal subscriber base, will lift the total revenue of regional print media companies by 8-9 per cent this fiscal, finds Crisil.
Advertising revenue, which contributes about two-thirds to the topline of regional print media companies, has high correlation with economic sentiment and spending on advertisement by corporates as well as state and central governments.
Economic sentiment remains positive, as reflected by growing budgetary spend on advertising and marketing by companies. Advertisement demand from sectors such as automobiles, FMCG, education, e-commerce, real estate, and services is also buoyant from local establishments as they prefer regional print players owing to their wide reach in the locality.
All this will lead to 9-10 per cent growth in overall advertising revenue this fiscal, offsetting a moderation in the government segment. Last fiscal saw increased government spending on advertisements in the run-up to the general elections and had propelled a similar growth in advertising revenue.
The healthy growth, coupled with softening newsprint prices, will also expand the operating profitability of the players by 200 basis points to 20-22 per cent. This will be in addition to the 400 bps expansion in margin already clocked last fiscal as newsprint prices retracted.
The prices of newsprint paper, which accounts for 35-40 per cent of the total operating cost of print media companies, are softening on the back of modest global demand and easing of supply chain issues. Newsprint prices, which rose 41 per cent in FY23 due to logistical disruptions amid the Russia-Ukraine war, have softened since then and continue to slide.
“A steep on-year fall of 21 per cent in newsprint prices during fiscal 2024 shored up the operating profitability of regional print media companies by 400 bps to 18-20 per cent during the fiscal,” said Ankit Kedia, Director, Crisil Ratings. This, coupled with the projected revenue growth will further expand margin by 200 bps to a healthy 20-22 per cent this fiscal.
