Indian media and entertainment firms script growth story in FY’10

After a lull driven by the recession, the media and entertainment sector is on a strong rebound amid restructuring.

The combined turnover of 40 listed M&E companies stands at Rs 174.42 billion for the fiscal ended March 2010, up 13.18 per cent over the earlier year, as the stresses and strains of the economy eased during the 12-month period.

Adjusting to the changing business landscape and absorbing the pain of massive staff layoffs, the sector also improved its profitability. The drive in the last few years was just the reverse as companies stretched to expand their footprint and kept their eye on valuations as raising capital was far easier in a bull-run phase.

The jump from a FY’09 revenue of Rs 154.1 billion was led by broadcasting, distribution and publications companies.

Zee Entertainment Enterprises Ltd was ahead of the pack with an income of Rs 22 billion during the fiscal.

Companies continue to focus on cost-cutting drives, a main corrective step after going on an expansion overdrive. Overall expenses dropped to Rs 127.91 billion, from Rs 146.55 billion in FY‘09, falling by 12.72 per cent between the fiscals.

Print cut expenses by 92.18 per cent, while production houses dropped costs by 13.4 per cent.

At an operational level, the sector has had the most remarkable turnaround story between the two fiscals as operating profit rose 198.9 per cent higher in FY’10 over the year-ago period. The FY’10 operating profit of Rs 24.05 billion looked healthier than the earlier year’s Rs 8.04 billion.

The companies who had the highest operational efficiency in the fiscal are Sun TV (Rs 7.7 billion), ZEEL (Rs 5.8 billion) and Deccan Chronicle Holdings (Rs 4.4 billion).

In FY’10, broadcast news, production houses, cable TV distribution, specialty retail and radio were in the red as far as bottom lines go.

However, the media and entertainment sector as a whole posted a net profit of Rs 9.08 billion in FY10, as against Rs 4.86 billion a year ago. This 86.98 per cent jump in bottom line came at the back of strong performances from Sun TV (Rs 5.2 billion), ZEEL (Rs 4.8 billion), Deccan Chronicle (Rs 2.6 billion) and HT Media (Rs 1.2 billion).

TV18, IBN18, WWIL, Dish TV and Reliance Mediaworks notched up losses of over Rs 1 billion each during the fiscal.

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