"Next fiscal, with strong economic rebound on the cards, ad revenue should grow 31 per cent on-year and subscription revenue around 24 per cent," Jain added.
The TV segment contributing around half of the sector's topline has recovered fully and will report healthy growth next fiscal. Ad revenue saw a sharp contraction initially, but recovered swiftly thereafter, aided by airing of new content, sports events such as the Indian Premier League and a buoyant festive season, Crisil Ratings Ltd said in a statement.
"As for subscriptions, TV was resilient even during the peak of pandemic as people remained indoors," it added.
The print segment, which contributes a fifth of the M&E sector topline, is recovering, though at a much slower pace, and should be able to rebound fully only by the end of next fiscal, it added.
"Print is losing share in ad revenue mainly to the digital segment. Circulation too, especially for English language, could see a loss of 8-10 per cent, because of increased preference for e-papers in metros. However, print companies are rebooting their cost structure and accelerating digital adoption to stay relevant," the ratings agency added.
Stating that digital has emerged as the medium of choice, Crisil Ratings Ltd Associate Director Rakshit Kachhal said the pandemic accelerated adoption of over-the-top (OTT) platforms, online gaming, e-commerce, e-learning, e-papers and online news platforms.
"This has meant the focus of advertisers has shifted from traditional to digital media. We expect the digital segment revenue to grow 14-16 per cent annually over the medium term. Its share of M&E sector revenue is expected to double to around 20 per cent by fiscal 2024 compared with last fiscal," Kachhal added.
Credit profiles of large media companies would be unaffected due to strong balance sheets, liquidity and the revenue rebound, while mid-sized and small ones could see stress, Crisil Ratings citing an analysis of over 80 of them rated by the agency.
Accordng to Crisil Ratings, films segment that contributes a sixth to the sector topline, is one of the most impacted segment but occupancies in theatres should improve with the vaccination rollout and a strong pipeline of content.
"However, this segment is likely to remain impacted even next fiscal due to social distancing norms and fear of closed spaces," it said, adding that other traditional media such has radio and outdoor, are seeing persisting pain, and will likely take much longer to recover.
This is because commuting as well as ad budgets for micro, small and medium enterprises the key drivers for these segments will remain restricted even in fiscal 2022, it said.
The ratings agency said credit profiles of small and and mid-sized media companies have weakened and liquidity pressure may intensify for them if recovery in ad revenue is delayed.
However, Crisil said M&E companies have adopted aggressive cost rationalisation initiatives. Besides, the pandemic-led change in consumer behaviour has accelerated monetisation opportunities forthese players through integration of digital media into their traditional businesses.
"Some of these aspects can lead to structural changes in business models of the M&E sector over the longer term," it said.
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