Govt ad spends, branding to boost print ad revenues by 15% in FY24

Mumbai: The print media's revenue growth will be maintained at up to 15 per cent in FY24 on the back of higher ad spends by governments and corporates, a report said on Tuesday.

The revenue will grow between 13-15 per cent to Rs 30,000 crore in FY24, ratings agency Crisil said.

Print media revenues had plummeted by 40 per cent in FY21 because of the pandemic, but bounced back later, growing at 25 per cent (FY22) and 15 per cent (FY23).

Crisil said its estimates are based on an analysis of companies it rates, which account for 40 per cent of the sector's toplines.

The rating agency said 70 per cent of the revenues for companies come from advertising while the remaining 30 per cent comes from subscriptions.

“Higher spending on advertisement (ad spend) by corporates in key sectors and an uptick in government ad spend in view of the upcoming state and general elections are expected to lift the revenue of the Indian print media sector 13-15 per cent to Rs 30,000 crore this fiscal,” the agency said.

A growing topline, along with a decline in newsprint prices, will lead to profitability of the sector, surging 10 percentage points to 14.5 per cent this fiscal, it said.

“Higher ad spends by the government, which contributes a fifth of the sector's ad pie, in the wake of the upcoming elections will… push growth,” its director Naveen Vaidyanathan said.

A steadfast domestic demand for fast-moving consumer goods, retail, clothing and fashion jewellery, launches of new automobiles, rising preference for higher education, online shopping and growing real estate sales — sectors that contribute about two-thirds of the print media ad revenue — will keep the momentum in ad revenue growth going, he added.

He said the growth will get the overall revenue for the print media almost at the pre-pandemic level at the end of this fiscal.

Amid concerns over reader preferences shifting to digital platforms, the agency said the sustained recovery indicates “enduring popularity of print media in India” and pointed to advantages it possesses like low cover prices, convenience of home delivery, ability to provide original and credible content and sticky reading habits.

Subscription revenues are expected to grow by up to 7 per cent in FY24 on an increase in cover prices, on top of the 8-10 per cent growth in FY22 and FY23, the agency said, adding this points to a significant share of readers continuing to prefer physical newspapers.

Print media companies, especially English newspapers, have started monetising premium digital content, which is seeing good traction, the agency said, saying English newspapers have been feeling the heat of digital competition more than the vernacular ones.

Subscription growth has a bearing on the profitability of print media companies because of increased requirement of newsprint, the key raw material for production of newspapers, it said.

India imports more than half of its total newsprint requirement and Russia, a major source, has been at a war with Ukraine since late February 2022. Freight rates soared amid logistics logjams as the conflict intensified which pushed up newsprint prices in the last fiscal, the agency said.

The steep surge in newsprint prices sheared 8.50 percentage points off the operating margins of print media companies to 4.5 per cent in FY23 though revenue increased.

But, newsprint prices have come down in recent months — correcting as much as 15-20 per cent from the peak last fiscal — owing to modest global demand and easing of supply chain issues, and will help the profit growth.

Over the medium term, margins should remain healthy but below the steady-state margins of over 20 per cent seen in the past, the agency said.

Any significant rise in newsprint prices or macroeconomic factors affecting the sector's growth and profitability will be the factors to watch out for, it said.