| Broadcast Audience Research Council | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL A/Stable' rating on the long-term bank facilities of Broadcast Audience Research Council (BARC).
The rating continues to reflect the healthy business risk profile of BARC as the sole television (TV) viewership estimation agency in India, and its established business model with high revenue visibility and customer retention. The rating also factors in the strategic importance of the council to member entities. These strengths are partially offset by the modest financial risk profile.
Revenue from advertisements (ads) are strongly correlated with the level of economic activity. Ad revenue for TV broadcasters rose significantly in the first half of fiscal 2023, as economic activity revived after the pandemic. However, ad revenue remained subdued in the second half amidst macroeconomic headwinds. Thus, the firm reported modest revenue growth for fiscal 2023 with revenue of Rs. 321 crores (against Rs. 316 crores in fiscal 2022). Operating margin has also been impacted with resumption of field related activities increasing the operating cost in fiscal 2023.
As per management, while ad revenue growth was subdued for TV broadcasters in the first half of fiscal 2024, it is expected that second half will have better result with the onset of the festive season and Cricket World Cup etc.
CRISIL Ratings has noted the recommendation paper on review of TV audience measurement and ratings in India, introduced by the Telecom Regulatory Authority of India (TRAI) on April 28, 2020. CRISIL Ratings understands that the recommendations are being reviewed by Ministry of Information and Broadcasting (MIB), in consultation with various stakeholders, and BARC has made the necessary representation to MIB. Final guidelines by the MIB, with respect to the recommendations, will be monitored. Any guideline that impacts the status of BARC as the sole provider of TV viewership measurement in India is a key rating sensitivity factor. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of BARC and its subsidiary, Meteorology Data Pvt Ltd (MDPL), together referred to herein as BARC, as MDPL is considered to be a core subsidiary of BARC because of its strong integration with the parent’s operations.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
BARC was formed in fiscal 2010, based on recommendations of TRAI and guidelines from MIB. It is the sole agency, providing independent TV viewership estimation in India, and it is promoted by three industry associations: Indian Broadcasting and Digital Foundation Federation (IBDF – formerly known as Indian Broadcasting Foundation), The Indian Society of Advertisers (ISA) and Advertising Agencies Association of India (AAAI), with a shareholding ratio of 60:20:20, respectively. This underpins the strategic importance of the agency for the entire industry.
BARC's viewership ratings act as a benchmark for ad decisions. The firm uses superior watermarking technology and has installed around ~55000 panels and 2500 OOH meters panels also referred to ‘Bar-O-meters’ which collect viewership data. High capital intensity and regulatory approvals act as strong entry barriers to the business.
BARC will maintain its strong market position over the medium term, backed by its large panel base and acceptance from various broadcasters. Any guideline by the MIB that could impact the status of BARC as the sole provider of TV viewership measurement in India, is a key rating sensitivity factor.
A large share of the revenue of broadcasters is contributed through ads. As the sole provider of independent TV viewership estimates, BARC is highly strategic to broadcasters. This ensures customer stickiness and good revenue visibility, on the ad front.
Broadcasters contribute about 75% to the revenue for BARC. BARC is able to manage it cash flows better as it bills its client quarterly and in advance.
Further, the stakeholders of the system being IBDF, ISA, AAAI have shareholding in BARC that underpins its importance. Also, board of BARC constitutes of members of these industry bodies. Considering the strategic importance of BARC as an independent provider of viewership numbers, support from the member entities should continue.
Weakness:
The financial risk profile remained subdued in fiscal 2023, as some of field activities resumed after the pandemic affected fiscal 2021 and fiscal 2022, adding to the costs and thus impacting operating profitability. Going forward, the financial risk profile is expected to be constrained as it is a section 8 entity. With efforts being taken on cost reduction, it should be able to cover its debt obligation and capex plans through internal cash accruals. |
Liquidity: Strong Expected cash accrual of Rs 35-40 crore per fiscal should comfortably cover the debt obligation of Rs 5.15 crore in fiscal 2024. The company had cash and cash equivalents of Rs 60.40 crore, against debt of Rs 12.80 crore as on June 30, 2023. Debt obligation and capex requirement will be met through internal cash accrual. |
Outlook: Stable BARC will continue to benefit from its sole player status in the viewership estimation business and its relevance to all key stakeholders. The financial risk profile should remain supported by healthy cash accrual. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company BARC, set up as a Section 8 firm* in fiscal 2010, is an industry body that designs, commissions, supervises and owns TV audience measurement systems in India, and provides related services. It is promoted by three industry associations, IBDF, ISA, and AAAI, with shareholding of 60:20:20, respectively. BARC uses audio watermarking technology and has deployed around 59,000 BAR-O-meters. The entity is venturing into viewership estimation for digital platforms and is increasing the number of BAR-O-meters deployed.
*Section 8 firm is an entity that is registered under Section 8 of Companies Act, 2013 and has in its objects the promotion of commerce, art, science, education, sports, research, social welfare, religion, charity, protection of environment or any such other object. They are complied by the law to apply its profits in promoting its objects; further, they are prohibited from declaring dividends. |
Key Financial Indicators – BARC (Consolidated) – CRISIL Ratings adjusted figures
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Interchangeable up to Rs 5 crore each with letter of credit, performance bank guarantee, financial bank guarantee, letter of undertaking (LoU) for buyer’s credit, and up to Rs 15 crore each with sales invoice discounting and working capital demand loan |
Annexure – List of entities consolidated
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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