With the third quarter of the current financial year drawn to a close, it is once again time to look at how well TV broadcast networks fared during the quarter. The quarter which includes the months of October, November and December is expected to be a very good quarter for broadcasters as it is right in the middle of the festive season. The third quarter is also considered as the wedding season period and sees ad spends of jewellery and gifting brands increasing during the period. Added to this, the quarter also witnessed three State Assembly elections being contested in Maharashtra, Jharkhand and Jammu & Kashmir during the period.
In the previous quarter (Q2FY2015), TV broadcasters had seen sluggish growth in revenues (Sluggish quarter for TV broadcast networks). For instance, Zee Entertainment Enterprises Ltd. (ZEEL) during Q2FY2015 saw its operating revenues increase by only a low 1.5% to Rs.11,178 million. This low growth was attributed to the change in the accounting treatment of domestic and international subscription revenues. Network18’s consolidated operating revenues increased by 5.1% from Q1FY2015 and saw 11.2% increase in comparison to the corresponding quarter in the previous year. Raj Television Network’s net profits fell sharply by 78.2% in Q2FY2015 from the corresponding quarter in the previous year and managed to grow its operating income only to Rs.200.75 million from 191.11 million in Q1FY2015. Sun TV Network in the quarter ending September 2014 saw its operating profit increase by 7.9% from the previous quarter.
Expectations from TV broadcasters in Q3FY2015 were expected to be higher with economic stability and factors such as festive season bringing about more ad spends.
Positive Q3 results for entertainment broadcasters
The third quarter results for the current financial year for ZEEL were much better as it recorded a growth in the consolidated operating profit (EBIDTA; earnings before interest, depreciation, tax and amortization) of 21.5% over the corresponding period in the previous year. The consolidated operating profit stood at Rs.3,533 million and increased from Rs. 2,907 million in Q3FY2014. Operating revenues increased by 14.8% during the quarter to Rs.13,637 million from Rs.11,884 million in the corresponding quarter of the previous year and Rs.11,178 million in Q2FY2015. The EBITDA margin for the quarter stood at 25.9% and profit after tax (PAT) margin stood at 22.5%. PAT was up 43.5% year on year (YoY) at Rs.3,065 crore.
Advertising revenue growth of the network in Q3FY2015 increased by 8.5% YoY to Rs.7,426 million from Rs.6,843 in the corresponding quarter of the previous year. The company reported that excluding the sports business the advertising revenue growth was mid-to-high teens. However, subscription revenues was down 2.3% to Rs.4,461 million from Rs.4,565 million in the corresponding quarter of the previous year. The reason for this is the underlying growth in domestic subscription revenues being in low double digits and international subscription revenue being in high teens. Total revenues grew by 14.8%. Whereas, total expenses also increased by 12.6%.
Punit Goenka, MD & CEO, ZEEL in a release to the press said, “The television industry had a good quarter as far as ad spends are concerned. The festive season saw a robust growth, which moderated slightly post the period. We had a good quarterly performance, reflecting the industry wide trend. On the domestic subscription front, we grew in low double digits during the quarter. On a sustained basis, we are growing in the high single digits on domestic subscription revenues. Implementation of digitization in the remaining parts of the country will push the growth momentum further. As a result of our consistent performance, we continue to operate at a healthy margin.”
Network18 too posted good results in comparison to last quarter. The consolidated operating revenues were up by 14.3% since the corresponding quarter of the previous year and stood at Rs.831.9 crore. It increased by 11.7% from Q2FY2015 which stood at Rs.744.8 crore. The consolidated PBDIT was also up by 12.7% from Q3FY2014 and stood at Rs.67.1 crore in Q3FY2015 from Rs.59.5% in Q3FY2014. It increased significantly since Q2FY2015 to 286.9% as operating PBDIT stood at Rs.17.4%. The consolidated PAT was up by 15.7% YoY which during this quarter was Rs.22.4 crore and increased from Rs.19.3 crore in Q3FY2014. The PBT in the previous quarter stood at a negative Rs.14.8 crore. Total expenses had however grown significant to Rs.788.5 crore from Rs.687.6 crore in the corresponding quarter of the previous year.
TV18’s total operating income increased significantly to Rs.607.2 crore during the quarter from Rs.525.5 crore in Q3FY2014 and Rs. 553.7 crore in Q2FY2015. Profit before tax (PBT) increased to Rs.64.1 crore from Rs.54.3 crore in Q3FY2014 and from Rs.46.6 crore in Q2FY2015. Total expenses also increased during this quarter to Rs.542.3 crore from Rs.460.1 crore in Q3FY2014 and Rs.508 crore in Q2FY2015.
Sun TV Network reported a robust 15.25% increase in its net profit that stood at Rs.214.13 crore from Rs.185.79 crore in Q3FY2014. During the last quarter the reported PAT was Rs.154.47 crore. The reason for this robust growth during this quarter was attributed to the lower expenses. Total expenses were down to Rs.124.37 crore from Rs.136.32 crore in the corresponding quarter of the previous year. The income from operations rose to 8.67% to Rs.552.44 crore in Q3FY2015 from Rs.508.34 crore in Q3FY2014. Total income also increased to Rs. 575.03 crore from Rs.523.19 crore in Q3FY2014 and Rs.531.22 crore in Q2FY2015.
Raj Television Network (Raj TV) on the other hand saw a decline in revenues during the quarter as its report PAT declined by 58.16% to Rs.2.09 crore from Rs.4.99 crore in Q3FY2014. It however had increased since last quarter which was Rs.76 lakh. The total income declined by 19.59% against the corresponding quarter and stood at Rs.20.38 crore from Rs.25.34 crore in Q3FY2014. It was up marginally from the Q2FY2015 which stood at Rs.20.28 crore.
News broadcasters see better results
TV Today Network in Q3FY2015 saw its standalone net profits increase by 28% which stood at Rs.26.34 crore from Rs.20.64 crore during the same quarter in the last fiscal. Net sales during the period has increased to Rs.131.15 crore compared with Rs.110.94 crore a year ago. Television broadcasting revenue was up during the quarter to Rs.127.72 crore as against Rs.107.05 crore in Q3FY2014.
NDTV too saw its revenues increase during the quarter. The reported PAT stood at Rs.2.65 crore from a negative PAT of Rs.1.66 crore in the corresponding quarter. The PAT negative during the previous quarter was at Rs.20.18 crore. The total income had increased by 12.85% and stood at Rs.113.67 crore from Rs.100.72 crore during Q3FY2014 and Rs.80.02 crore in Q2FY2015. EBIT increased by 113.09% during the quarter to Rs.7.65 crore from Rs.3.59 crore in the corresponding quarter. The EBIT was also down by Rs.14.76 crore in the previous quarter. This is definitely a good improvement in the company’s financials during the quarter.
Going by these results of TV broadcasters Q3 has definitely lived up to their expectations and have seen more growth since not only the corresponding quarter of the previous year but also from Q2. The festive season was definitely a key reason for this growth especially for TV broadcasters, while the three assembly elections during this period could be attributed as a key reason for a better growth from news broadcasters. It remains to be seen how last quarter of the financial year will pan out.