PACRA assigns Initial Ratings to ARY Communications Limited

ARY Communications Limited (‘ARY’ or the ‘Company’) is part of the ARY group, holds a robust market position, broadcasting different channels across Pakistan. The Company has subsidiaries namely; ARY Films & TV Productions Private Ltd., which produces the television content for all the channels and ARY Films Private Ltd., which is indulge in films production and distribution business. Leveraging content acquisition strategies, ARY maintains the prominence of its star channels namely, i) ARY Digital and ii) ARY News, which have retained their position according to their genre for long. ARY Digital ranks no.1 and has 30% viewership share in Entertainment channels whereas, ARY News ranks no.2 and has 17% viewership share in News channels , source; Aurora Nov-Dec 23 edition. ARY has also launched a sports channel namely ASports, first HD sports channel in Pakistan, currently holds exclusive broadcasting rights of PSL for 2 years, season 9 & 10. The ratings derive comfort from experienced sponsors and relatively high market share over the years. The Media industry in Pakistan has seen a substantial increase in number of advertising platforms. TV channels and other platforms require engaging content to attract viewership and secure advertisements. During FY23, total advertising spent stood at PKR 100bln (FY22: 88.73bln) and has been increasing steadily over the years. The TV advertisement has scooped up the major portion standing at PKR 43.41bln capturing 43.34% (FY22: PKR 38.64bln | 43.55%) of the total advertising spend. As at FY23, there are 140 active TV channels (FY22: 132) however, few channels have made themselves renowned and gained impressive viewership leading to securing more and high paying advertisements. Top 5 Pakistani channels are i) ARY Digital, ii) Geo Entertainment, iii) Hum TV, iv) Geo News, and v) ARY News. The Company derives revenue from only Advertisements and holds ~26% market share in terms of revenue to total advertisement spend on T.V. During FY23, the Company revenues has sustained its growth pattern and stood at PKR 11bln (FY22: PKR 9.9bln). Moreover, the margins have showed significant increase and gross margins increased to 25% (FY22: 11%) and net margins increased to 12% (FY22: 5%). Working capital management is anchored by the prolonged receivables however, significant room to borrow gives cushion to the ratings. The Coverages have showed exponential growth at end Jun-23 and interest coverage stood strongly at 30.7x (FY22: 2.9x). Capital structure has remained on the lower side over the years and at Jun-23 stood strongly at 4.9% (FY22: 1.4%). Sponsors invested efforts in blooming and willingness to ensure the Company’s exponential growth gives comfort to the ratings.
The ratings are dependent on the management's ability to sustain the market position amidst considerable competition and changing business environment. Moreover, diversity in topline along with investment book supporting the bottom line will be beneficial for the ratings.

About the Entity
ARY Communications limited (the ‘Company’ or ‘ARY’) was incorporated in Pakistan in October, 2001 as Private Limited Company and later on, in September, 2008 the Company changed its status to Public Unlisted Company. The Company is a family-owned venture with ~99% shareholding under grasp. Mr. Salman Iqbal, including ARY Digital FZ LLC, holds ~65% of the total shareholding. Rest of the shareholding resides within the family and ~1% is outside the family. Mr. Salman Iqbal, a well known media personality, spearheads the Company as the CEO. Mr. Jerjees Seja, a well known media personality and producer, is the Head of Media Business and Mr. Minhas Muhammad Hassan acts as the Group CFO & Company Secretary, directly reporting to the CEO. They are supported by an experienced management team.