New Delhi: India Ratings, a Fitch Group company, maintained its negative outlook on the country’s media and entertainment sector for the first half of 2013 as slowing economic growth and cost-cutting leads to sluggish growth in advertising expenditure.
The agency has a stable outlook on the second half of 2013 on expectations of an improved economic environment.
It said the digitisation programme will benefit television broadcasters, multi-system operators (MSOs) and direct-to-home (DTH) operators as under-reporting of subscribers, estimated at 15-20%, is set to end.
The agency also expects 10-15% of current analog cable subscribers would move to DTH.
The financial performance of TV broadcasters is likely to be moderate in the first half but improve in the last six months, the report said. Mandatory digitisation will help them counter the negative impact of the expected muted advertising revenue growth.
After digitisation, carriage fees are also likely to decline due to a significant improvement in bandwidth, provide scope for rationalisation of these charges, it said.
The print industry will continue to remain under pressure, the agency said. The print media industry has been growing at single-digit rates for six consecutive quarters starting in the third quarter of the 2008-09 fiscal year. The industry has been hurt on revenue and cost owing to the moderation in advertising growth and firm newsprint prices, it said.
Improved corporate revenue, a stronger rupee and a significant drop in domestic and international newsprint prices could improve the outlook for the sector.
Online advertising will have the fastest growth in the medium to long term although it will still be smaller than TV and print, it said.
India Ratings expects print and television to benefit from a likely improvement in growth to 7% in FY14 on the back of a boost in advertising expenditure.