Incubation costs, one time write-offs, event postponement widen NDTV loss in Q4-2014

BENGALURU: New Delhi Television Limited (NDTV) reported a negative PAT of Rs 31.39core in Q4-2014 as compared to a loss of Rs 10.43 crore in the immediate trailing quarter Q3-2014, and a profit of Rs 27.81 crore in the year ago quarter Q4-2013.

For the year as a whole, the company reported a higher loss of Rs 81.18 crore in FY-2014 as compared to a profit of Rs.1.91 crores in the previous fiscal FY-2013.

(Note: Rs 100 lakh = Rs100,00,000 = Rs 1 crore = Rs 10 million)

The company says in its earnings release that the Q4 numbers for FY-2014 include one-time write-offs amounting to Rs 14 crore. University Cricket Championship, which contributed Rs 33 crore in revenue in Q4 in FY-2013 was also postponed this year.

Further the company informs that this has been an investment year for NDTV with an aim to turn around loss making verticals and incubate new growth businesses. Significant incubation costs for NDTV Prime and NDTV e-tailing venture have contributed to the annual losses. These businesses are now showing robust revenue growth, and are heading for profitability, claims NDTV.

Let us look at the other figures reported by NDTV for Q4-2014 and FY-2014

NDTV reported a 2.62 per cent drop in Income from operations (Op Inc) in Q4-2014 to Rs 124.09 crore from Rs.127.43 crore in Q3-2014 and a drop of 33.48 per cent from Rs 185.56 crore in Q4-2013.

The company reported a 12.66 per cent drop in Op Inc to Rs. 460.10 crore in FY-2014 as compared to Rs.526.81 crore in FY-2013.

Two segments now contribute to NDTV’s revenues - a) Television Media and related operations  (TV) and b) Retail/E-commerce (Retail).

TV revenue in FY-2014 dropped 13.70 per cent to Rs 454.63 crore from Rs.526.81 crore in FY-2013. NDYV’s TV segment’s Q4-2014 Op Inc at Rs 113.61 crore was 13.29 per cent less than the Rs 131.02 crore in the previous quarter Q3-2014 and was 39.10 per cent lower than the Rs 186.56 crore in Q4-2013.

This segment reported a loss of Rs 29.56 crore in Q4-2014 as compared to a positive result of Rs 3.29 crore in Q3-2014 and a positive result of Rs 35.53 crore n Q4-2013. During FY-2014, the TV segment reported a loss of Rs 30.88 crore as compared to a profit of Rs.3.62 crore  in FY-2013.

NDTV’s Retail segment reported an Op Inc of Rs 3.5 crore in Q4-2014 as compared to revenue of Rs 2.31 crore in Q3-2014. In FY-2014, it reported revenue of Rs  6.32 crore. Since the segment commenced operations in FY-2014, the company did not report any numbers for it in FY-2013.

The Retail segment reported a loss of Rs 24.88 crore in FY-2014, while the segment result was NIL in Q4-2014 as compared to a loss of Rs 5.38 crore in Q3-2014.

Marketing, Distribution and Promotional Expenses

The company's  Marketing, Distribution and  Promotional Expenses  show an upward trend in terms of absolute rupee value; in terms of percentage of Op Inc.,  the movement is downwards during the four quarters of FY-2014.

Excerpts of what the company has to say:

The Board of NDTV has mandated the management to explore means of unlocking sum of parts shareholder value, through various methods including restructuring or a private placement in NDTV Convergence and/or other subsidiaries.

It is worth noting that NDTV 24x7 has been PAT positive for the last 5 years, with an average annual profit of Rs. 40 crores. The channel continues to command unrivalled viewership (50 per cent plus) in the English news genre.

NDTV Convergence has registered a CAGR of 54 per cent over the last 6 years and is targeting a significant jump in revenues to touch Rs. 100 crores in the coming year.

NDTV Lifestyle Holdings has a cash balance of more than Rs. 110 crores.

NDTV Worldwide, the consultancy arm of the group, has been profitable for the past 4 years.

And now, there are successful efforts to turn around businesses which have been loss making.NDTV India historically a loss making channel, has clocked recordbreaking revenues in FY 2014 and achieved EBITDA breakeven.

NDTV Profit which had been making average annual losses of Rs. 40 crores for the last 3 years is expected to turn around after its revamp. The revenues of the dual channel with pre-sponsored bands are up 140 per cent in April 2014. – The e-tailing venture’s revenues are up by 40 per cent on a q-o-q basis. The incubation costs of Rs. 25 crores have been well spent. Talks are on for a private placement at very attractive valuations says the company.

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