Cable TV

Network18 Q2 FY-14 EBITDA is back to black

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BENGALURU: Investors in TV18 Broadcast Limited (TV18) have a reason to smile and cheer, though the stock market has not reacted positively to the Q2-2013 results post the financial announcement. The stock?s price had taken a shallow dive (down by about 1.75 per cent) at the time of writing this report.

Though the company has been showing improved performance over the past few quarters, it has returned a profit of Rs 10.1 crore for the current quarter Q2-2014. ?While the general news and niche genres witnessed continued softness, our advertising revenues from entertainment led by Colors grew strongly,? says the company.

TV18 Broadcast, a subsidiary of Network 18 that operates news channels, also operates a joint venture with Viacom, called Viacom18, which houses a portfolio of popular entertainment channels - Colors and Colors HD amongst others.

Let us look at some of the Q2-2014 figures reported by TV18

A consolidated summary shows that TV18?s revenue at Rs 483.2 crore for Q2-2014 has grown by almost a third (32.3 per cent) as compared to the Rs 365.1 crore for Q2-2013 and by 22 per cent as compared to the Rs 396.2 crore for Q1-2014.

Revenue from news and infotaiment at Rs 119.7 crore in Q2-2014 has shrunk by 1.2 per cent as compared to the Rs 121.1 crore in Q2-2013 and is almost flat (grown by 0.6 per cent) as compared to the Rs 119 crore for Q1-2014. Though y-o-y operating profit for Q2-2014 from news and infotainment at Rs 8.4 crore is more than double (2.1 times more) than the Rs 4 crore for Q2-2013, it is almost half (57 per cent) of the Rs 14.7 crore the segment had returned for Q1-2014 (q-o-q).

It is general news that has bled news and infotaiment profit that has accrued through business news. General news with revenue of Rs 49 crore in Q2-2014 has taken a 19 per cent fall as compared to the Rs 60.3 crore in Q2-2013 and a 11.2 per cent drop to Rs 55.2 crore in Q1-2014. Operating loss from general news at Rs (-8.2) crore more than doubled (operating loss increased by 248 per cent) the Rs (-3.3 crore) reported for Q2-2013 and was almost six times the Rs (-1.4) crore operating loss for Q1-2014. Maybe the group needs to consider a massive revamp of its general news programming and presenters? offerings?

Business news with revenue of Rs 65.2 crore saw a more than healthy growth of 26 per cent as compared to the Rs 51.9 crore in Q2-2013 and 14 per cent growth as compared to the Rs 57.3 crore for Q1-2014. Business news returned an operating profit of Rs 18.3 crore, 8.3 per cent higher than the Rs 16.9 crore for Q2-2013 and 4.6 per cent higher than the Rs 17.5 crore in Q1-2014.

Revenue from entertainment - television (Colors and other channels) in Q2-2014 at Rs 174.5 crore has gone up by a whopping 36 per cent as compared to the Rs 128.5 crore for Q2-2013 and is more by 15 per cent when compared to the Rs 151.8 crore for Q1-2014. TV18?s operating profit from entertainment - television segment at Rs 24.7 crore is 80 per cent more than Rs 13.7 crore for Q2-2013 and 62.5 per cent more than the Rs 15.2 crore in Q1-2014.

TV18?s entertainment-Motion Pictures segment revenue of Rs 62 crore for Q2-2014 was about 2.8 times more than the Rs 22.1 crore for Q2-2013 and 2.3 times more than the Rs 18.8 crore for Q1-2014. This segment also has returned an operating profit of Rs 3.7 crore in Q2-2014 as compared to losses of Rs (-7.4) crore and Rs (-8.4) crore in Q2-2013 and Q1-2014 respectively.

Though revenue from IndiaCast has almost doubled to Rs 182.5 crore as compared to the Rs 95 crore in Q2-2013, operating profit of Rs 1 crore from this stream is almost a fourth of the Rs 3.9 crore for Q2-2013 and less than half the Rs 2.3 crore for Q1-2014.

Inter-segmental eliminations have wiped off a massive Rs 55.1 crore from TV18?s consolidated revenue, but have had a net gain of Rs 1.8 crore to the overall results.

Note: IndiaCast is a 50:50 joint venture between TV18 and Viacom18 and has been consolidated as such. IndiaCast commenced operations on 1 July 2012 and as such, is consolidated only from Q2 FY13. For the previous year it was consolidated as a 100 per cent subsidiary. TV18 moved to the net distribution income methodology of accounting for carriage and subscription from Q2-2013. Q1-2013 results had been regrouped to ensure comparability. For Q1-2013, gross subscription and carriage numbers are included in the audited results of FY2013. From the current year (FY-2014); TV18 says that it has stopped reporting new operations separately given their vintage and that segmental numbers are based on management accounts and are not audited.

Viacom 18 numbers

Q2-2014 revenue for Viacom 18 stood at Rs 546.7 crore, a growth of 34 per cent over the previous quarter. Operating profits grew strongly to Rs 57.5 crore as against Rs 12.6 crore in Q2-2013.

Television broadcasting revenue for the current quarter (Q2-2014) was Rs 349.1 crore as against Rs 257 crore in the previous year. Operating profit from TV18?s television business stood at Rs 49.4 crore and grew by 80 per cent over previous year. The growth was driven by both strong advertising and distribution revenues, says the company.

Viacom18 Motion Pictures released five movies during the quarter under review (Q2-2014). The slate had three Hindi titles Bhaag Milkha Bhaag, Luv U Soniyo and Madras Caf? and two Marathi titles - 72 miles and Kumari Gangubai Non Matric. Bhaag Milkha Bhaag and Madras Caf? were critically acclaimed and runaway hits. Operating profits from the business stood at Rs 7.5 crore for the quarter (Q2-2014).

Network18 managing director Raghav Bahl says, ?Even though the macroeconomic environment continued to be uncertain, the media and entertainment industry is well poised to deliver robust growth. At TV18, we are confident of maintaining our growth trajectory to create value for our stakeholders. During the current quarter our broadcasting operations turned in strong operating profits. We are particularly heartened by the doubling of operating profits in the first half of the current financial year as compared to previous year.?

Group CEO B. Saikumar said, ?During the current quarter, we turned in robust operating profits for both our broadcasting and motion pictures businesses. We embarked on an operational restructuring programme to realise synergies across the news network which will be instrumental in creating sustained value. Our entertainment business turned in an excellent quarter and IndiaCast continued on its growth trajectory. The advertising environment continues to be lackadaisical especially for news and other niche genres but we remain confident of delivering a strong year ahead.?

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