Advertising spends have sustained the momentum for the second consecutive quarter. Cast your eyes on the chart above. Advertising expenses of the non-financial sector, according to data from the Centre for Monitoring Indian Economy, have increased 20% year-on-year for the March quarter. Sure, December quarter ad expenses had increased a bit faster. But note that the base quarter for December was relatively more favourable. For the December 2016 quarter, advertising expenses had declined 11% whereas they had increased 2.6% during the March 2017 quarter.

This is comforting for media firms, as it affirms the signs of recovery first seen in the December quarter. Broadcasters Zee Entertainment Enterprises Ltd and Sun TV Network Ltd had done well in the December quarter. The good run continued in the March quarter as well.

In the December quarter, print media companies had lagged way behind their broadcasting peers on the advertising front. Another quarter down the line, print media firms too have shown some signs of recovery in advertising revenues. Some print media companies saw an year-on-year increase in their advertising revenues for the March quarter compared to a decline in the December quarter.

“Broadcasters’ growth was driven by thrust from FMCG, contribution from which for print media is relatively much smaller," said Rohit Dokania, research analyst at IDFC Securities Ltd.

It would still be prudent for investors in print media companies to wait and watch whether the improvement shown by them is sustained. In its conference call, DB Corp Ltd said the real estate category, which is a big one for the print media, is showing a little bit of growth but still hasn’t reached its historical level. The education category too is growing in single digits.

Analysts foresee an upbeat outlook on advertising revenues for fiscal year 2019 (FY19) for both television and print media.

“From here onwards, print media companies should see an improvement on a gradual basis and incremental growth is expected to be better," said IDFC Securities’ Dokania. The economy is improving and the impact of goods and services tax is also waning, which should benefit print media companies. “It’s worth noting, however, that the second half of FY19 is expected to be far better for print media—investors can expect double-digit advertising revenue growth compared to the first half," he said. This is on the back of expectations that government spending on advertising would pick up meaningfully in months closer to the general election in 2019.

In the near term, though, higher newsprint prices are expected to weigh on the numbers for print media companies.

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