Media - Q2FY21 Result Preview - ICICI Securities

With the resumption of TV content shoot and broadcast of fresh content, broadcasters were on the recovery path in Q2 with ad volumes being better than the lockdown period. However, on a YoY basis, ad revenue decline (albeit lower) is expected to continue. Subscription is a saving grace as it is expected to sustain. Multiplexes remained shut resulting in zero revenues leading to losses across EBITDA and PAT levels. However, theatre reopening in "Unlock 5" is positive.

Ad recovery to be key parameter for broadcasters

After a pause of three months, telecast of fresh TV content resumed from July onwards and GEC viewership soared to pre-Covid levels. However, ad pricing continues to remain under pressure and will affect overall ad revenue. Ad revenue improved from lockdown lows but YoY, it will witness a decline. The key relief, however, will be sustenance/continued growth in subscription revenue. Implementation of NTO 2.0 is further delayed as the matter is still sub judice and clarity on the same is awaited. Zee is expected to report 3% YoY domestic subscription growth on a high base owing to no price hike while overall subscription is expected to grow 3.3% YoY. Domestic advertisement revenue is expected to decline ~26% YoY due to low ad rates (ad volume back to pre-Covid level). Notwithstanding, 6% decline in operating costs, we expect Zee to witness EBITDA margins at 23%, 965 bps down YoY owing to negative operating leverage.

Sun TV is anticipated to report ad revenue decline of ~26% YoY while subscription revenues are expected to grow sharply 17.2% YoY. We expect EBITDA margin (ex-IPL) at 68%, up 740 bps YoY mainly due to lower content costs. We expect news segment to outperform its peers. TV Today is likely to report 6.5% YoY revenue de-growth (on a benign base) in TV broadcasting owing to absence of premium rates based events. Digital revenues are expected grow 5% YoY after witnessing a decline in Q1FY21. TV Today is expected to report 13.7% YoY decline in EBITDA to Rs. 29.3 crore while EBITDA margin is expected at 17.9% (down 94 bps YoY).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Media_Q2FY21.pdf

Source : Equity Bulls

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