Interestingly, broadcasters are expected to turn in a better quarter. The reason: last year there were too many new players in the market, such as 9X and Real. As a result, the carriage fees (the charge paid by broadcasters to cable operators to put their channels in the higher frequencies) were very high, and this squeezed bottom lines. Players such as TV18, which launched Colors, reportedly paid close to Rs 100 crore as carriage fees, while Zee had to pay close to Rs 80 crore to stay in contention. However, the scenario has changed, with more than 50 per cent of the 100-plus channels launched last year (across genres and languages) shutting shop and existing players such as 9X, which had planned to launch nine channels, going slow on their plans for now.

Complementing the shakeout in the media industry, is a cyclical recovery that’s underway, with major broadcasters, including Zee Entertainment and Sun Network, hiking advertisement rates in the last quarter, says Ishan Sethi of Goldman Sachs in his latest report. Zee raised ad rates across its channels by up to 10 per cent, while Sun TV announced an increase of between 9 per cent and 33 per cent across its Tamil channels and 5 per cent to 16 per cent for the others. “Driven by the increase in ad rates and a noticeable increase in ad inventory utilisation, we continue to expect 10-12 per cent sequential growth in advertising income in the second half of the current fiscal and 14-15 per cent growth in FY11 y-o-y,” says Sethi.

Besides, direct-to-home will be one of the major catalysts of revenue for broadcasters.

Gaurang Kakkad, analyst with Religare Securities, says, “Players such as Sun TV and Zee will see margins expand. Sun could see a revenue growth of 23 per cent and bottom line growth of 20 per cent.” No wonder analysts are bullish on Sun TV and Zee Entertainment.
In the print space, Jagran Prakashan and HT Media are expected to fare well. As per the Indian Readership Survey (IRS) 2009, Jagran Prakashan’s Dainik Jagran has retained its leading position for the 13th consecutive time with a readership of 54.8 million. HT Media’s Hindustan Times also gained readership by 4.4 per cent to 27.9 million.

Although, international newsprint prices have spiralled upwards from a low of $446 per metric tonne (mt) in October 2009 to $511 in December, they are still significantly lower than the $960 levels of October 2008. Since newsprint cost accounts for more than 70 per cent of costs of the newsprint industry, a lower newsprint cost is always a boon. HT fared the worst last fiscal, as it was stuck with high-cost inventory coupled with a fall in ad revenues. However, in the second quarter of the current fiscal, the company demerged its Hindi print media business into a separate subsidiary and it plans to list it soon. In terms of operational performance, most analysts expect revenues to grow by 5.2 per cent y-o-y. Within the print pack, HT Media and Jagran Prakashan are the top picks by analysts.