SECTOR WATCH: Media

Q4 Review: The print and television media have done well in the quarter ended March 2007, with net profits rising by 40 per cent on a revenue growth of 32.5 per cent. The growth in profits can be attributed to an increase in advertisement revenues and decline in the newsprint costs.

The revenues of HT Media grew by 23.6 per cent, driven by a 32 per cent growth in advertising revenues due to the launch of new supplements and editions. NDTV reported a revenue growth of 16.4 per cent, after adjusting its net loss of Rs 17 lakh, resulting from new initiatives.

Trigger: Advertising growth in India is both cyclical and structural, with increased contribution from industry segments such as retail, real estate, telecom, automobiles and financial services.

According to analysts, media companies are strategically poised to benefit from buoyant ad revenues and softening newsprint prices. The newsprint rates have corrected by 20 per cent from the yearly peak.

Outlook: Deccan Chronicle has targeted sales revenues of Rs 750-800 crore for FY ‘08, a year-on-year rise of about 36-45 per cent. It has increased the advertisement charges by 30 per cent across all sections and editions, effective from May 2007. HT Media expects pressure on margins owing to its new initiatives such as ‘Mint’ and ‘Fever 104’.

The increasing literacy, emergence of local-centric businesses and broadcast clutter are driving advertising revenues for the print media. The growth has been further triggered by fund infusion of $675 million and entry of global brands such as the Wall Street Journal, Financial Times and so on.

The Indian advertising industry is likely to grow at a CAGR of 15 per cent in the next four years and the print media will share about 45 per cent of the incremental growth.

According to an analyst at Man Financials, the media firms are venturing into new advertisement verticals such as radio, out-of-home (OOH), event management and TV to benefit from the existing client relationships.