Media Companies Expected to Achieve 8% Revenue Growth, Reaching Rs 60,000 Crore by FY27: Crisil

Media companies are projected to attain an 8% revenue growth, reaching Rs 60,000 crore by FY27, driven by the increasing contribution from the digital segment, according to an analysis by Crisil. This study examined 20 companies that account for 55% of the media industry’s income.

This growth follows a compounded annual growth rate (CAGR) of 5% over the past five fiscal years, bringing total revenue to Rs 47,000 crore in FY24. The combination of revenue growth and a focus on cost rationalization is expected to expand operating margins by 500 basis points (bps), reaching 18% by FY27. 

The media companies included in the analysis span various segments such as broadcasting, print, out-of-home advertising, radio, television and digital platforms. The digital segment covers text, audio, video, interactive media, and images across websites, apps and social media platforms.

According to Crisil, the shift toward digital consumption resulted in slower annual growth of 5% between FY19 and FY24. This shift was driven by factors such as increased smartphone usage, rising internet penetration, low data costs in India, and the rollout of 5G technology. Media companies, however, were slow to 

Manish Gupta, Senior Director at CRISIL Ratings, explained: “To better capitalize on the digital trend, media companies have started focusing on digital platforms like over-the-top (OTT) services, social media, and mobile apps. As a result, the digital segment will increase its share of media revenue, rising from 12% in FY24 (up from 8% in FY19) to over 18% by FY27, as consumers increasingly turn to digital media for news and entertainment.”

Fueled by expansion in the digital sector, these companies are projected to see overall revenue increase by 8% annually from FY25 to FY27. This growth will also be bolstered by rising advertising revenue in traditional sectors like print, thanks to increasing demand from industries such as fast-moving consumer goods (FMCG), automobiles, education, online shopping, and real estate.

Nevertheless, the digital segment has encountered profitability challenges, mainly due to substantial upfront costs for manpower, content creation, and marketing. Additionally, fierce competition has led to narrow margins, as consumers have access to many free content alternatives.  

Ankit Hakhu, Director at CRISIL Ratings, noted: “The operating performance of the digital segment is expected to improve. Media companies are now identifying the most appropriate customer segments for their offerings, allowing for more targeted promotional expenses. In Crisil's study, 8 out of 20 companies have already made significant progress in this area.” 

The growth of the digital segment has enabled advertisers to create ads that align with consumer interests and shopping behaviors. By leveraging insights into consumer preferences, targeted advertising campaigns utilizing analytics can increase ad revenue for each promotional dollar spent.

Together with expanding scale, this is anticipated to help companies manage fixed costs more effectively, with the digital segment expected to achieve break-even in operating profitability by FY27.

In summary, as the digital segment achieves profitability and traditional revenue sources keep growing, media companies are projected to experience a 500 basis point improvement in operating margins, reaching approximately 18% by FY27.

However, overall profitability will still be influenced by factors such as raw material costs, especially newsprint, which makes up 30-40% of total expenses. Geopolitical events or supply chain disruptions could lead to unexpected price changes, as demonstrated in FY23 when the average price of newsprint rose to $840 per tonne, a 23% increase year-on-year.