Media looks on the cusp of solid growth, as stage set for ad boom

Media in India is considered a sunrise sector of the economy and it is on the cusp of a strong phase of growth.Company SummaryNSEBSEZee EntertainmentLoading data…

PEER COMPANIESDish TVEXPAND TO VIEW ALL By DK Aggarwal

India is one of the highest spending and fastest growing advertising markets globally. However, in the recent past, the media sector has seen lower advertisement revenue due to weak business climate and companies catering directly to the retail segment offered more discounts to maintain market share and clear inventory before the implementation of the Goods & Services Tax (GST).

GST implementation is learnt to have affected advertisement spends by nearly 20-25 per cent in a major way, especially from sectors like FMCG and real estate. In calendar 2016, total advertising spend across all sectors in India stood at $8.18 billion and is estimated to reach $16.7 billion by 2020.

With the onset of the festive season, we may see good growth in retail advertisements, as companies are likely to spend more on advertisements and will make up for the shortfall in the first half of the calendar. With improved monsoon this year, the seventh Pay Commission award and other positive factors, consumer demand is expected to move up from here on, especially in rural India, which typically sees more sales and leads to advertising.

Industry majors believe a big leap in spending will come from players such as e-commerce, new players entering the food & beverages segments, banking & finance, automotive players, mobile companies and the government sector.

Since 2014, the Modi government has supported growth in the sector through taking various initiatives such as digitisation of the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms besides other reforms such as ‘Digital India’, ‘Creation of Smart Cities’ and ‘Make in India’, to name a few.

As per DIPP, FDI flows in the information and broadcasting (I&B) sector (including print media) stood at $6.49 billion during April 2000 – March 2017 period.

Media in India is considered a sunrise sector of the economy and it is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. Almost all media companies have undertaken several strategic growth and expansion initiatives across markets be it print, digital and radio platforms. Now, they have diverted their focus to ensuring implementation, consolidation and monetisation of these endeavours.

Revenues of the media sector are expected to improve on the back of lower inflation and lower interest rates. The sector is also expected to benefit more from the significant reform-led efforts by the Union government to encourage investment and improve the business climate. Notably, the recent launch and implementation of GST is expected to support growth, as the country gradually transforms to improved tax compliance, administration and ease of doing business, unifying the national market.

If data is to be believed, expenditure on advertising in India is expected to grow 12 per cent to Rs 61,100 crore (US$ 9.47 billion) in 2017. From the media space, one may consider investing in companies such as HT Media, DB Corporation, TV18, Zee Entertainment and Dish TV for the long term.

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