Most advertisers, especially the big three spenders — consumer goods, e-commerce, and auto had cut back on spending, given the economic slowdown and worries related to NTO 2 implementation. Zee, for example, had reported a 16 per cent fall in advertising
revenues in the December quarter because of a reduction in spends. While the Street was hopeful of a consumption-led demand recovery, given the virus outbreak, a recovery seems unlikely in the near term.
Compiled by BS Researcu Bureau
While ad revenues will be hit, brokerages are hopeful of robust subscription revenues, led by strong channels of market leaders such as Zee Entertainment and Sun TV. Zee had reported a 22 per cent gain in subscription revenues in Q3 because of bouquet pricing and higher off-take of its portfolio channels. The momentum in their over-the-top applications (Zee5 and Sun NXT) will also be key.
The other positive from the investors’ perspective is valuations. Both Sun TV and Zee Entertainment are down by 50-64 per cent, respectively from their respective annual highs. While Zee is trading at 8x its FY20 earnings estimates, Sun TV is available at 10x its FY20 earnings estimates, with analysts recommending a buy given their resilient businesses, net cash balance sheet and rock-bottom valuations. Even though Sun TV was down over 7.7 per cent in trade on Wednesday, Zee made a smart recovery, ending the day with gains of 23.7 per cent.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.