Digital to drive media revenue growth to 8% in next two fiscals to Rs 60,000 crore

The digital space will help media companies to print in an 8 per cent annual revenue growth over the next two years, taking the topline to Rs 60,000 crore, on the back of an annualized 5 per cent growth over the past five fiscals. In FY24 the topline reached Rs 47,000 crore, says a report.

Revenue growth, along with focus on cost rationalization, will expand operating margin by 500 bps to 18 per cent by fiscal 2027, Crisil Ratings said Thursday in a report based on the analysis of 20 media companies which account for 55 per cent of the industry revenue. The report did not quantify how much the topline will be in FY25.

The report covers media players in the broadcasting, print, radio and out-of-home advertising. Media companies have seen a slower annual growth of 5 per cent between fiscals 2019 and 2024 following shift in consumer preferences to the digital mode.

According to Manish Gupta, a senior director with the CRISIL, to leverage the digital wave better, media companies have begun focusing on the digital space such as over-the-top platforms, social media and mobile apps. As a result, the digital segment will continue to grow its share in the revenue pie, from 12 per cent in fiscal 2024, up from 8 per cent in fiscal 2019 to over 18 per cent in fiscal 2027, as consumers increasingly turn to digital modes for consumption of news and other media content.

Driven by growth in the digital segment, the overall revenue of media players will grow 8 per cent annually over fiscals 2025-27. It will also be supported by increasing ad revenue in traditional print and publication streams in sync with the growth in domestic retail demand in sectors like fast-moving consumer goods, automobiles, education services, online shopping and real estate.

According to Ankit Hakhu, another director with CRISIL, operating performance of the digital segment is now expected to improve, after being a drag for years due to higher initial investments. Within the 20 companies analysed at least eight are on profitability now.

Improvement in overall operating profitability also remains sensitive to movement in prices of other key raw materials and input costs for these players such as newsprint prices, which account for 30-40 per cent of overall costs. In FY23 newsprint prices averaged USD 840/tonne, up 23 per cent on-year. The New Indian Express