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Sun TV Network shows brighter results for FY 2013; announces ad rate hike

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MUMBAI: The Sun TV Network is celebrating its twentieth birthday this year. And the sun seems to be coming out from the clouds at south India's strongest media company - involved in broadcasting and production with a bouquet of 32 channels - if one looks at its latest financials for FY 2012 and FY 2013. Both profits and revenues are up, despite the testing times it is facing in its markets with national broadcasters such as Star, Sony and Zee TV getting aggressive in the regional language space.

In an earnings release filed with the BSE earlier today, it stated that ad revenues maintained momentum up 15 per cent in the quarter ended March 2013 and DTH subscription revenues rose 16 per cent quarter on quarter and 12 per cent year on year. It also said that FM radio operations posted a strong around with its revenues rising 26 per cent year on year and reported profits.

And it is looking at even better times in the year ahead the Sun Group CFO SL Narayanan told CNBC TV 18 earlier today. It announced that it was hiking ad rates for Sun TV for its weekday prime time slots by 19 per cent and also looking at hiking the slot fees it charges TV producers. This would be its first increase after 24 months, and it would look at raising advertising tariffs for the other channels under its umbrella in the coming months.

But for now let's take a look at the standalone results for Q4 FY 2013 vs Q3 FY 2013

Net profits fell by 6.5 per cent to Rs 177.50 crore on a quarterly basis as compared to Q3 FY 2013; however there has been a notable increase of 11.6 per cent when compared to the corresponding Q4 FY 2012 net profit of Rs 159.03 crore showing a clear positive trend.

Its operational income of Q4 FY 2013 witnessed a slight decrease by 2.71 per cent to Rs 472.67 crore as compared to the numbers in Q3 FY 2013 but a positive upward trend of over 10.6 per cent is witnessed from the corresponding Q4 FY 2012 which stood at Rs 427.01 crore promising a decent growth and expansion.

The operational expenses have increased by over 5.5 per cent to Rs 225.79 crore for Q4 FY 2013 as against Rs 213.90 crore for Q3 FY 2013, while the corresponding Q4-FY 2012 's operational expenses stood at Rs.205.63 crore, implying an annual 9.8 per cent increase in expenses. Although the operational expenses overall have increased, the employee remuneration and benefits seem to have dipped to Rs 444.50 crore in Q4 FY 2013 from the preceding quarter's Rs 476 crore.

Let's take a look at the annual consolidated results for FY 2013 vs FY 2012

The overall net profits seem to show a decent positive trend. FY 2013's net profits stand at Rs 709.56 crore as compared to FY 2012's net profits of Rs 692.91 crore, a minimal increase of 2.4 per cent.

The operating expenses over the year seem to have significantly increased to Rs. 955.59 crore for FY 2013 as against FY 2012's Rs. 906.40 crore year ending, a notable 5.42 per cent. A major contribution to these expenses is from 'cost of revenue' which has shown a drastic 39 per cent increase. Also the operational revenues show an increasing trend of around 4 per cent standing at Rs 1923 crore for FY 2013 from Rs 1847.17 crore of FY 2012.

The revenues have shown a better trend since the early quarters of the financial year 2013, considering the deal of Sun TV Network with AIADMK's Arasu Cable that was sealed in same year, leading to better advertisement and subscription revenues for its Tamil channels. However with Chennai, the city that gathers significant revenues in terms of subscriptions, resisting digitisation, the fruits of a digitised ecosystem have yet to accrue to its financials.

The deferred tax liability in the balance sheet has positively shrunk and stands at Rs 28.44 crore for FY 2013 from Rs 33.78 crore for FY 2012. The long term loans too been clipped by around 54 per cent which seems to be a positive.

The current liquidity ratio stands at 0.38:1 as compared to last fiscal year's ratio of 0.33:1, a slight improvement in its short term solvency position.

On the assets side, Sun TV shows an increase in its fixed assets to Rs 1335.89 crore in FY 2013 from Rs 1205.54 crore in FY 2012.

The meeting of the board of directors held on the 17 May has recommended a final dividend of Rs 2 (40 per cent) on a face value of Rs 5 per share. This is apart from the interim dividend of Rs 2.50 per share declared earlier in January 2013.

The board has also announced an update on its allocation of its IPO proceeds totalling up to Rs 571.94 crore. Out of this a major part amounting to Rs 355.77 crore shall be used in capitalisation of its subsidiaries.

The share price is at 427.90, down by 3.42 per cent (15.15 points)

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