Q3FY2009 Media earnings preview: January 06, 2009

Q3FY2009 Media earnings preview  We expect Q3FY2009 to be a bad quarter for most media companies as we expect the rate of the year-on-year (y-o-y) growth in their revenues to taper off substantially in the wake of a significant cut in the advertising spends in the key sectors, such as banking, financial services and insurance (BFSI), real estate and automobiles. Also, a general sense of rational advertisement spend (bang for the buck) and fragmentation across media verticals due to an increase in competition would lead to a slower revenue growth. Consequently, as the revenue growth lags behind the increase in costs, we expect media and entertainment companies to report subdued earnings for the quarter. Overall, we believe the media and entertainment industry is in for tough times as advertisers tighten their advertisement spends in a bid to control costs. Also, fragmentation across media verticals has led advertisers to evaluate "bang for the buck spent". We believe alternate media such as radio and out-of-home advertising are likely to face higher pressure compared with the other verticals. We maintain Zee News as our preferred pick in the sector.   Click here to read report:  Sharekhan Special

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