Soft ad markets dulling broadcasters’ revenue growth?

The second quarter of FY25 revealed a diverse performance landscape for broadcasters in India, with some companies experiencing growth in advertising and operating revenue, while others faced declines. The results reflect the ongoing shifts in the media industry as broadcasters adjust to changing market dynamics, fluctuating advertising spends, and evolving consumer behaviour.

Network18 reported an operating revenue of Rs 1,825 crore in Q2 FY25, a slight dip of 2% from Rs 1,866 crore in the same quarter of the previous fiscal year. Despite this decline, the company remains one of the largest players in India’s broadcasting sector, continuing to generate significant revenue through its diverse portfolio of television channels and digital platforms.

Analysts suggest that while Network18 has been affected by some sector-wide challenges, its broad media assets continue to provide stability in a fluctuating market.

In contrast, Zee Entertainment (ZEEL) faced a challenging quarter, with a noticeable 8% drop in advertising revenue. ZEEL’s ad revenue fell from Rs 979.2 crore in Q2 FY24 to Rs 901.7 crore in Q2 FY25.

The decline underscores ongoing struggles in the competitive advertising space, where changing viewer preferences and a fragmented market have made it harder for large players to maintain growth.

Experts pointed to a subdued advertising ecosystem over the quarter citing the lack of significant investments from key sectors like automobile and e-commerce, which traditionally contribute heavily to media ad revenue.

Zee Media Corporation Limited (ZMCL), the news arm of ZEEL, faced an even steeper decline, with a 16.3% drop in advertising revenue. ZMCL’s ad revenue fell from Rs 151.5 crore in Q2 FY24 to Rs 119.2 crore in Q2 FY25, a substantial downturn for the news broadcaster. According to experts, the broader media sector continues to grapple with fluctuating advertising spends, and regional broadcasters have particularly felt the pressure.

However, Sun TV bucked the trend of declining ad revenues by posting a modest yet positive growth of 2.13%. The broadcaster’s advertising revenue increased from Rs 328.42 crore in Q2 FY24 to Rs 335.42 crore in Q2 FY25. 

Experts attribute this growth to Sun TV’s regional focus, which is proving to be a significant advantage in a fragmented media landscape. 

Karan Taurani, Senior VP at Elara Capital, noted that the regional genre is growing faster than industry averages and could become a clear winner among other genres. Regional networks have benefitted from a more captive audience and increased local viewership, which makes them attractive to advertisers.

Another key player, TV Today, experienced a slight downturn in its operating revenue, which declined by 3.3%. The company’s operating revenue dropped from Rs 213 crore in Q2 FY24 to Rs 206.7 crore in Q2 FY25. Despite this decline, TV Today remains a major player in the Indian media landscape, operating across multiple channels and digital platforms.

NDTV, on the other hand, was one of the standout performers in Q2 FY25, with a strong 16% increase in operating revenue. NDTV’s revenue rose from Rs 95.5 crore in Q2 FY24 to Rs 111.3 crore in Q2 FY25, driven by solid content offerings and strong viewership, which continue to attract both audiences and advertisers.

Despite the mixed results in Q2, industry experts remain cautious about the outlook for the third quarter. Several analysts suggest that the advertising ecosystem is still subdued, with key sectors like automobile and e-commerce unlikely to see significant investments in the near term. This trend could result in continued pressure on advertising revenues in the months ahead, which may further impact media companies.

In fact, during the second quarter of FY 2025 (July to September), ZEEL experienced a steady decline, with its stock falling from Rs 154 in July to Rs 137 by September, a loss of about 11%.

The subdued advertising environment likely contributed to this underperformance, as media and entertainment stocks are often highly sensitive to changes in advertising spending.

In contrast, Sun TV saw a strong performance in the stock market, rising from Rs 778 in July to Rs 900 in August, before correcting slightly to Rs 843 in September. Despite this correction, the stock still finished the quarter with an 8% overall gain, indicating positive investor sentiment, likely fuelled by favourable news or earnings expectations in the early part of the quarter.

Network18, on the other hand, exhibited mild fluctuations, moving from Rs 79 in July to Rs 99 in August, before dropping back to Rs 82 in September. The stock ended the quarter with a modest 3.8% gain, suggesting stable but low investor enthusiasm.

As broadcasters navigate these challenges, they will need to remain agile and responsive to shifting market dynamics. The next few quarters will be crucial for media companies to capitalize on emerging opportunities and mitigate the risks posed by a more fragmented and competitive market, experts said.