State-level restrictions cushion impact of second wave on M&E

The ravaging pandemic has upended industries across India with media and entertainment being no exception. According to reports by Elara Capital, the second Covid wave is submersing advertising spends as compared to the first wave.

The first Covid wave defaced the first quarter of 2020-21 ad revenues with a decline of 61 per cent YoY(ex- IPL)/79 per cent /87 per cent for TV/print/radio sectors.

“We expect Q1FY22 tampering to diminish, versus FY20 base at 25 per cent, 45 per cent, 35 per cent decline respectively, primarily on 1) on-going TV shoots led by a shift to alternate locations with minimal Covid impact on fresh content, 2) state-level restrictions versus pan India lockdown in 2020 and 3) continued print newspaper circulation and deliver, leaning on 2020 learning,” stated the report.

India witnessed stricter restrictions during the first wave as compared to the second wave. Live GEC movie shoots and print circulation was completely halted in the initial months of the first wave. As work from home became a huge phenomenon, severe mobility restrictions affected radio listenership. Therefore, ad spends for the vertical as ad volumes slimmed coupled with a sharp discounting marring yield.

As severe lockdowns were not imposed in the second wave, the impact on print media will be far lower and radio-car listenership is expected to return and arrest the further dip in radio verticals in 2021.

“We expect TV and digital advertising to show resilience and return to pre- Covid levels(FY20) at a faster clip, versus other mediums, to 100 per cent /137 per cent levels, respectively, in FY22E,” the report said.

The situation remains grim for print and radio as it might not recuperate to the pre-pandemic levels given the high exposure to local/SME advertising segments.

“We expect print/radio to revive to only 71 per cent/ 58 per cent of pre-Covid levels by end-FY22E,” reported Elara Capital.

TV ad spends is likely to remain resilient in the second wave as it is the most preferred medium for brand-building and advertisements due to its wide reach among mediums. The time spent watching TV rose 39 per cent during the first wave, according to BARC & Nielsen survey report. As consumer sickness is expected to remain for a longer term, a similar viewership spike will be seen on the second wave.

However, increased use of mobile phones may be a threat as the time spent on social media and online games spikes versus TV. As web series continues to attract customers on a large scale, binge-watching may spike for digital OTT.

Broadcasters with regional plays and news genres are expected to outshine.

“We believe broadcasters with high exposure to regional, sports, and news genres will outperform on advertising growth in 2021-22 and beyond – Sports and news are the two genres with continued demand for live consumption,” said the report. Outlook India