Sep 1, 2012|
Print Media Companies: Who weathered the storm?
The recent few quarters of FY12 and FY13 have been a tremendous challenge for Print Media companies in India. With the economic slowdown, there have been significantly fewer corporate India advertising campaigns. This reduction has directly hurt Print Media company revenues coming from the crucial advertisement segment.
Big 3 Print Media Companies - Key Financials
Further, costlier newsprint has also lowered margins. And though newspaper companies did take some rate hikes in a few select regions, a tough competitive environment restricted hiking subscription rates.
We have been told time and again, that troubled times test the strength and stability of the business models of companies. Let's see how well Print Media companies have been able to weather this storm.
In this article, we analyse the most recent quarter (1QFY13) performance of the 3 main players in the industry, Jagran Prakashan, HT Media and DB Corp.
1QFY13 - Performance of the Big 3 Print Media Companies
Overall, sales in the quarter ended June 2012 was very disappointing.
The table below summarizes the key financial performance of these three companies.
|Growth YoY (in %)
|Profit margins (in %)
Jagran, managed a 4% YoY sales growth, helped by its strong increases in both subscriptions (10%) and advertising (8%). In terms of profit margins, Jagran outperformed its peers both at the operating and net profit levels. In fact, Jagran's 1QFY13 operating profit margin and net profit margin grew 24.8% and 17.6% respectively versus the same quarter in the previous year. This result was due to both weak but positive sales as well as good cost management.
HT Media on the other hand registered 1% fall in sales, with ad revenue dropping 3% YoY during the quarter. And, the company's profit margins dropped and its net profit fell by 21%.
DB Corp recorded a 7% YoY sales growth - the highest amongst the three companies. However higher operating expenditure that grew by 18.4% YoY resulted in the net profit declining by almost 29%. DB Corp also witnessed shrinking profit margins as compared to the previous year.
Why did Jagran do better than the others?
Advertising represent 65% to 80% of total revenues for these companies. And so it is a major driver of performance. It speaks about the company's ability to bargain with the advertisers and get the best rates in the industry. While we may consider Jagran's better performance as a one off case, a deeper analysis of ad revenue growth trends throws up some fascinating information.
Ad Revenue growth trends
|Ad growth (YoY, in %)
Interestingly, when the economy started slowing down, Jagran's ad revenues rose in 3QFY12, and then held its ground. It seems that Jagran was better able to pave its way with advertisers and grow its ad revenue. Also, the company has reported good growth in subscription numbers on the back of recent price hikes.
In contrast, HT Media's ad revenues declined in 1QFY13.
Also, DB Corp had recorded huge ad revenue growth in the early FY12 quarters, it was not able to sustain these numbers as India's economy slowed.
Operating Expenditure - The table also highlights the fact that Jagran was able to manage its costs much better than the others.
Focus - Jagran has also focused on consolidating its business rather than chasing different business ideas. HT Media and DB Corp have instead.
Jagran has done better job getting ad revenues, managing its operating costs and maintaining its focus.
Essentially, Jagran has demonstrated that it has a strong business model, and that it is capable of weathering difficult times better than its peers. And when the economy picks up, Jagran seems to be well placed to capitalise on opportunities in the growing newspaper industry.
Jagran has shown that it can survive and thrive in storms, and with its consistent performance , we expect it to continue in the future too and be a good long term investment.
More Views on News
Aug 14, 2017
The management believes that GST will aid the advertising spends in the long-run.
Apr 26, 2017
Should you subscribe to the IPO of S Chand and Company Limited?
Jun 21, 2017
Should one subscribe to the IPO of GTPL Hathway Ltd?
Aug 1, 2016
Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.
Feb 3, 2016
Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407