Sun TV Network's outlook for FY22 remains positive despite short-term headwinds

It is hopeful of reaching the FY20 level ad revenue this year

KOLKATA: Sun TV Network has navigated the pandemic well through the FY21 despite initial setbacks as it ended q4 with Rs 449.88 crore profit, 80 per cent up year-on-year. While there could be short-term headwinds in ad revenue due to the second wave of the pandemic, the company remains positive that the performance would be much better than the last lockdown.

The broadcaster saw its ad revenue bounce back in the January to March quarter. However, the second wave hit the performance in the first quarter of FY22. It is still not known if a third wave would be more fatal. Hence, the company has not given any definite guidance for the coming year but its endeavour for the year is to at least reach the levels of FY20, a company spokesperson said in an earnings call.

In FY 21, the company’s subscription revenue grew by about 11 per cent in FY21. The company is confident to maintain double-digit growth in FY22 as well, especially as it hopes to see a higher purchase of set-top boxes by a related party distribution company. Despite uncertainty around NTO 2.0, the company sees enough visibility on the subscription side.

The company has improved primetime viewership in the Tamil market from 37 per cent to 42 per cent. As it is eying to come close to 50 per cent, it is taking steps to improve content quality, the overall narrative of storytelling. On the other hand, its overall fiction share has gone up by 36 per cent in the Kannada market as compared to the last two, three quarters. Hence, Sun TV wants to stay focused on gaining market share in these two markets.

Additionally, it has lined up “some huge launches” in Telugu and Malayalam market in the next one-two months.

However, its plans for Sun NXT, the over-the-top arm, have been pushed back again, albeit it has seen 40-50 per cent growth in the last six months. Although the company is in talks with a lot of potential producers for OTT originals, it is not going to start anything on that front at least before Q2. But the company can continue with small-medium movie digital premiers on the platform. Whenever the platform uploads a new movie on the platform, the subscription goes up immediately.

For this financial year, the company has ambitious plans for movie production. It is looking at eight movies, costing nearly Rs 1200 crore. Four movies are under production as shooting has started and in multiple stages and one among those is almost nearing completion, a company spokesperson said. Because of the delay in the first four movies being completed, the remaining might be taken up in the second half of the year.

Despite the strong performance in q4, the company’s dividend payout policy has attracted sharp criticism from investors in the conference call. For FY 21, the dividend payout dropped to Rs 5 per share from Rs 25 per share in FY20. The investors raised the question around management taking regular commission but not looking at shareholders’ interest. Sun TV Network management has not been able to give any forward-looking statement but has assured that it would share the concern with the board.

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