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Overall weak quarter for media companies - Media preview

ICICIdirect Research 11 Apr 2023 DISCLAIMER

What's Buzzing:

For broadcasters, Q4 is expected to be a weak quarter on the ad front given the muted ad spending by FMCG and impact of free to air channel exit. For multiplexes, Pathaan headlined the box office amid a muted quarter. 


Q4 was a relatively weak quarter for the box office barring Pathaan, which emerged a blockbuster with ~Rs 500+ crore, net box office collection. Thus, PVR Inox (combined entity) is likely to witness ~15% QoQ decline (up 26% YoY) in footfall at 31.8 mn. Average ticket price (ATP) is expected at Rs 239, flat QoQ. Advertisement remains at ~76% of pre-Covid for the company. We expect the company to report (ex-Ind AS) EBITDA margins of 3.5% in Q4FY23 (vs. ~14% in Q3 and loss in base quarter). On the other hand, GEC broadcasters are expected to witness a weak quarter with YoY ad decline owing to a) exit of free to air channel by Zee; b) weak ad spending by key categories including FMCG and c) Zee channels not being present on some cable networks amid New Tariff Order implementation for a couple of weeks in February, 2023 (now resolved). Sun TV’s ad revenues are likely to see a decline of ~2% YoY, given weak ad spends. Subscription revenues are expected to be muted (down 0.4% YoY). We expect EBITDA margins at 65.5%, down 90 bps YoY, due to a weak revenue performance. Zee's ad revenue is expected to witness ~12% YoY. Reported subscription growth is expected to be modest at ~1% YoY decline. We expect margins at 10.5%, down 550 bps QoQ, given the higher content costs and weak topline show. 

Our Perspective: 

With a decent content line-up ahead, box office collection momentum is a key monitorable ahead for multiplex space. Another key monitorable is fructification of synergy benefits for PVR Inox (targeting EBITDA level benefit of Rs 225 crore over 12-18 months). On the other hand, TV ad recovery would hinge on resumption of ad spends by FMCG players. An ad recovery would also be key in margin improvement for broadcasters, going ahead. Zee Sony merger completion would be another key development to watch.

Company Revenue  Change (%) EBITDA  Change (%) PAT  Change (%)
PVR  1,212.3 NA NA 304.4 NA NA -54.9 NA NA
Sun TV  786.8 -5.5 -8.2 515.4 -6.9 -10.1 380.7 -5.9 -8.6
TV Today 234.7 -3.1 1.4 42.0 -13.9 16.5 27.0 -24.8 -2.2
Zee Ent. 2,031.1 -12.6 -3.8 213.3 -56.2 -36.9 100.3 -44.9 312.4
Total 4,264.9 0.3 -8.4 1,075.0 -15.1 -23.5 453.0 -7.3 2.0
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