Credit outlook negative for film production, print media, TV broadcasting: ICRA

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Ratings agency ICRA on Thursday said the credit outlook for film production and exhibition, print media and television broadcasting segments is negative due to the impact of the coronavirus pandemic, while the same is stable for distribution platform operators and over-the-top platforms. Observing that the impact of COVID-19 on Indian media and entertainment (M&E) industry is a mix of pain, hope and opportunities, it said the pandemic has impacted the sector in a varied manner.

The sector comprises film production and exhibition, print media and television (TV) broadcasting segments, besides distribution platform operators (DPOs) and over-the-top (OTT) platforms.

ICRA said it has a negative credit outlook for the film production and exhibition, print media and TV broadcasting segments of the Indian M&E industry.

“Besides the direct impact by way of lost sales due to the shut-down of cinema halls, given the adverse impact on the overall economy, sharp reduction in advertisement spends has been observed in April and May 2020, and is expected to continue over the short-term.

“This, in turn, will dampen the revenues and profit margins of the aforementioned segments of the Indian M&E industry in FY2021,” it said.

ICRA Assistant Vice President Sakshi Suneja said, “Cinema halls were the first ones to shut down, even before the lockdown started, and are expected to be amongst the last segments to witness relaxations. This segment will thus witness a complete loss of revenues in Q1 FY2021.”

Even after the theatres resume operations post the lockdown, occupancy is expected to remain sub-par as consumers, as a means of caution, are likely to stay away from crowded places, she added.

ICRA said it expects the credit metrics for the players in the film production and exhibition segments to weaken materially.

For the print media segment, circulation revenues were adversely impacted by around 40 per cent on year-on-year (YoY) basis in April 2020, amid distribution challenges due to the on-going lockdown restrictions.

“Furthermore, advertisement revenues, which were already pressurised during FY2020 amid subdued economic conditions, declined by around 60-70 per cent YoY in April 2020. Advertisement revenues have also been adversely impacted for the TV broadcasting segment in April 2020,” it said.

On the other hand, the ratings agency said it has a stable outlook on DPOs and OTT platforms.

“The impact of the pandemic on the DPOs will be limited as subscribers are expected to hold on to their current subscription packages. New subscriber acquisitions have, however, been impacted as very few new installations are being carried out by DPOs, though the same is expected to resume once the lockdown restrictions ease.

“Prolonged lack of fresh content from TV broadcasters may, however, increase subscriber churn towards DD Free Dish,” it added.

It further said the current lockdown has led to a surge in consumption of OTT platforms as consumers stay home.

“While currently OTT platforms have an advertisement revenue dominated business model, the current crisis provides an opportunity to increase the proportion of paid subscription, led by the new habit formation of at-home OTT viewing,” it said.

Further, with the shut-down of cinema halls and expected aversion to outdoor viewing of films, OTT (especially large platforms) are being considered by the film producers for their film releases.

A shift in advertisers’ preference towards online platforms vis-a-vis linear platforms is also expected as they attempt to garner more eyeballs, especially after the deferments and cancellations of various sports programmes which were to be aired on TV.

“OTT platforms, however, are also facing dry up of fresh and quality content. Platforms with large content library are thus better placed to ramp up subscribers during the current crisis,” it said.




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