PACRA Maintains Entity Ratings of ARY Communications Limited

ARY Communications Limited is one of Pakistan’s leading broadcast media networks, operating a diversified portfolio of channels, along with international and OTT presence. Content production is supported through two wholly owned subsidiaries: ARY Films & TV Productions (Pvt.) Limited and ARY Films (Pvt.) Limited. The Company has historically maintained a strong market position, driven by brand equity, consistent content quality, and experienced sponsors. ARY Digital remains the top-performing entertainment channels, while ARY News continues to hold a strong position in the news segment. ARY has secured the digital streaming rights for the ICC Men’s T20 Cricket World Cup, alongside Tamasha and MyCo, highlighting its strategic push into the OTT segment. The Company is in the process of acquiring Pakistan Super League (PSL) broadcasting rights for four years, strengthening its sports portfolio and viewership base. ARY derives all of its revenues from advertising, exposing it to cyclicality and concentration risk. The operating environment remains challenging, marked by intense competition, advertising budget rationalization, and a structural shift of advertising spend toward digital platforms. However, supported by experienced sponsors and sustained audience dominance, ARY maintains a strong market position amid intensifying competition across Pakistan’s expanding advertising and media landscape. Financial performance weakened in FY25 following strong growth in FY24. Revenues declined by approximately 22% to PKR 11.9 billion (FY24: PKR 15.2 billion), reflecting subdued advertising demand. Profitability compressed materially, with gross margins declining to ~10.2% (FY24: 18.8%) due to higher transmission and broadcast costs, while net profit fell to PKR 199 million, translating into a net margin of ~1.7% (FY24: 8.8%). The decline in profitability was partly attributable to lower-than-expected PSL viewership, arising from geopolitical developments that disrupted the tournament schedule, which adversely impacted audience engagement and related advertising revenues. Cash flow coverage metrics deteriorated, with FCFO declining to PKR 250 million in FY25 and interest coverage weakening to ~1.3x (FY24: 9.9x), driven by lower earnings and higher finance costs. Working capital remains stretched due to elevated receivables. As of June 2025, total borrowings stood at PKR 629 million, while equity increased to PKR 9,598 million, resulting in an improved leverage ratio of ~6.1% (FY24: 7.9%). Strong sponsor support and financial strength continue to provide comfort to the ratings.
The ratings are sensitive to ARY’s ability to stabilize revenues, improve margins, and strengthen cash flow coverages amid a competitive and evolving media landscape. Revenue diversification beyond advertising, improvement in receivable management, and recovery in profitability will be critical for rating sustainability. Continued sponsor support, strong market presence, and maintenance of a conservative capital structure remain key supporting factors.

About the Entity
ARY Communications Limited (“ARY” or “the Company”) was incorporated in Pakistan in October 2001 and converted into a public unlisted company in 2008. The Company is a family-owned media group, with approximately 99% shareholding held by the sponsor family. The largest stake (around 46%) is held through ARY Digital FZ-LLC (UAE), primarily owned by Mr. Salman Iqbal, resulting in his aggregate direct and indirect ownership of ~65. Mr. Salman Iqbal serves as Chairman and CEO. The media business is led by Mr. Jarjees Seja, and Mr. Minhas Muhammad Hassan Molwani acts as CFO and Company Secretary. The Company benefits from an experienced management team that supports its growth and objectives.