The rating agency forecasts that advertising growth would slow down over the course of the year due to moderation in economic growth and cost cutting by corporates
Against the backdrop of a troubled economy, the media sector is in for a slowdown. According to an outlook report by Fitch, TV broadcasters generate 70%-90% of revenues from advertising compared with about 70% for newspaper publishers, and are therefore likely to be the worse hit.
“Moderation in economic growth and cost reduction initiatives by corporates lead to slower growth in advertising spending. Fitch reduced India’s GDP growth forecast for year ending March 2012 (FY12) and FY13 by 0.5% each to 7.0% and 7.5%, respectively. Fitch expects lower adspend growth to hamper revenue growth and profitability of the two key media segments – print and television broadcasting. These two segments represent over half of the Indian media and entertainment industry, accessing over 80% of the adspend,” says the report.
Industries which contribute to at least 75% of the adspend– FMCG, pharmaceuticals, realty, services and banking –are expecting muted revenue growth, and are likely to stick to cost reduction moves. “Fitch believes adspend growth will remain subdued in 2012. However, Fitch believes that it is unlikely that growth rates will be as low as the ones observed in the 2009-10 period,” the report says.
During 2009-10, print media industry saw single digit growth rates for six consecutive quarters starting Q3FY09. Broadcasting was also affected during this period, but the impact was less than on print. Fitch expects the Indian media industry to grow at the rate of 8% to 12% in 2012.
Another factor which will have a significant impact on print media is the rise in newsprint prices. The report says that urban-centric newspapers that use a higher proportion of imported newsprint will be more affected thanks to the depreciation of the rupee. “With high newsprint costs and lower revenue growth, the agency expects the margins of the print media industry to fall to the range of 18% to 22%. Broadcasting industry margins are expected to fall to the range of 24% to 28%,” says the report.
This does not bode well for the already ailing sector. According to their respective balance sheets for March 2011, Den Networks has a debt of Rs154.71 crores, and Hathway Cable & Datacom Ltd. of Rs 275.81 crores. DQ Entertainment International has a debt of Rs 75.61 crores. In the last quarter, ending 31st December, Cinevistaas, DQ Entertainment and Den Networks saw their stock prices drop by 20%, 36% and 28% respectively. The only exception is Hathway Cable, which saw an increase of 30% in its stock prices.
However, there is hope, says Fitch, in form of Phase III Radio auctions and mandatory digitisation. However, radio auctions, though profitable in the long run, may have a negative effect on the credit profiles of the entrants. The digitisation move will prove beneficial for multi-system operators in the medium-to-long term.
“However, the proposed mandatory digitisation will require significant capex to develop the digital infrastructure. The agency believes that the expected improvement in the business profile of MSOs would outweigh any financial risks stemming from large debt-funded capex in the short-term,” says the report. MSOs like Hathway Cable & Datacom, who have voluntarily started the digitisation process, are expected to better manage the overall execution and financial risks better, anticipates Fitch.
‘Bharti AXA Life iProtect is one of the most competitive term plans in the market today:’ Sandeep Ghosh, CEO, Bharti AXA Life Insurance.
Bharti AXA Life Insurance announced its growth plan through the online distribution platform at the launch of its first online term insurance product – Bharti AXA Life iProtect plan.
Announcing Bharti AXA Life’s growth strategy for the online platform, Sandeep Ghosh, said “Online is fast growing as a medium of search and purchase amongst Indians. Recent studies show that the internet penetration in India has doubled in the last 5 years and is expected to triple by 2015 to over 250 million users. E-commerce in financial services has grown over 30% year on year for the last 3 years, insurance being a significant part of it.”
Online is going to form an important part of Bharti AXA Life’s distribution strategy. Consumer preference has played a pivotal role in the company’s foray into this new channel. Talking about this newly launched distribution channel Mr. Ghosh added, “Online as a distribution channel requires a fundamentally different perspective of looking at insurance sales. Various studies indicate that affordability, convenience and access are the prime motivators for consumers to buy online insurance. Bharti AXA Life iProtect is one of the most competitive term plans in the market today. The functionality we have built as part of the user interface will help the customer purchase the policy in a few simple steps. To add to their convenience, we have gone a step further dedicated a special customer service team- “tele-assist”, to assist our customers in the buying process.
The company has consciously bundled its strong product proposition with a customer centric-centric service benefit. Mr. Ghosh added, “iProtect is an online term plan and we understand that the moment of truth for this category is claim settlement. In times of distress, the family of the deceased may require immediate money to meet unforeseen expenses. Our unique and industry first service guarantee – “Family Care benefit” ensures a release of Rs1,00,000 within 48 hours of claim intimation.”
The company wants to provide the online customers a unique product and service proposition backed by best in class and convenient buying experience.
Bharti AXA Life iProtect product features include:
(a) One of the most competitive online term plans in the market.
(b) Simple and easy process designed keeping the customer convenience in mind.
(c ) No medical test up to Rs50 lakhs cover.
(d) Policy available at special-rate premiums for non-smokers.
(e) Tele-Assist feature – A special customer service team to assist the customer during the online buying process. The policy is available at special-rate premiums for non-smokers.
(f) Family Care Benefit: Release of Rs1,00,000 from Sum Assured within 48 hours of claim submission, in event of policy holder’s demise.
The country is expected to see a record wheat production for the fourth straight year at an estimated 88.31 million tonnes in the 2011-12 crop.
New Delhi: The country is expected to see a record wheat production for the fourth straight year at an estimated 88.31 million tonnes in the 2011-12 crop year due to higher yield and good weather conditions reports PTI
Wheat output was at a record high of 86.87 million tonnes last year also.
The overall foodgrains output is also estimated to exceed the target of 245 million tonnes and touch a record 250.42 million tonnes, according to the second advance crop estimate for 2011-12 released by the Agriculture Ministry today.
The foodgrains output was at 244.78 million tonnes in 2010-11.
This is the second-straight year of a record foodgrains production, boosting the government's plan for implementing the Food Security Bill, that aims to provide cheaper grains to the poor.
Out of total foodgrains output, rice production is estimated to increase to 102.75 million tonnes this year, as against 95.98 million tonnes last year.
However, pulses production is estimated to be lower at 17.28 million tonnes this year, as against 18.24 million tonnes last year.
Similarly, oilseed production is estimated to fall to 30.52 million tonnes from 32.47 million tonnes in the reviewed period.
In the cash crop basket, cotton production is estimated to be a record 34.08 million bales (of 170 kg each), as compared with 33 million bales last year.
Jute output is estimated to 11.61 million bales (of 180 kg each) in 2011-12 as against 10.6 million bales last year.
Sugarcane production is expected to be higher at 347.86 million tonnes as against 342.38 million tonnes last year. PTI LUX