Sun TV Network to up spends in TV, film content as OTT investment takes backseat
The company plans to spend Rs 200-250 crore on satellite rights acquisition
Sun TV Network management has revealed that the company will make big investments in TV content and film content in FY22 and beyond. At the same time, OTT content investments will continue to take a backseat in the first half of the fiscal. The company plans to spend Rs 200-250 crore on satellite rights acquisition.
In the Q4 and FY21 earnings conference call, the company's management said that 5-6 big-budget, non-fiction shows based on the international format will be launched during the fiscal in Telugu and Malayalam markets. These shows comprising 30-40 episodes will run for 3-4 months and cost per show is expected to be Rs 25-30 crore.
"We are looking at some international format non-fiction shows. So, I think fiction, we have — even if you want to really up the quality and give some really fantastic products, I think maybe there could be a 30%, 40% increase in the cost. But this impact on non-fiction shows, which are basically having some limited number of episodes, this could be 40 to 50 episodes, that’s where I think we have contemplated, and we have planned. So that will be approximately in one market, it could be around Rs 20-25 crore is a total investment which will spread over three to four months," said Sun TV Network MD Mahesh Kumar.
The management also stated that eight movies have been planned over the next two years at an investment of Rs 1200 crore. Sun TV Network Group CFO SL Narayanan said that the movie content investment is spread over the next two fiscals.
Sun TV Network CFO VC Unnikrishnan said four movies are under production as shooting has started and in multiple stages while one movie is almost nearing completion. Shooting for a couple of movies are 30% to 40% complete. The fourth movie has just commenced shooting. Two of the eight movies are big ticket releases with South Indian megastars in the lead role. With regard to film shooting, the company is facing issues due to restriction in outdoor shoots and second opening of theatres and multiplexes.
The management also indicated that the OTT original content investment will take a backseat since a lot of Capex will be deployed towards TV and film content. The company feels that the content investments in TV and films will aid the OTT business because all of that content will also sit on Sun NXT. The company was earlier planning to spend Rs 150-200 crore on OTT content.
"I think we should be able to answer this with greater clarity by next quarter call, because I don’t think at this point in time, we are able to get anything going because of so many dislocations. Because the first priority is to get rid of the backlog in the movie, which incidentally will also boost our content library on the OTT. Because we’re seeing that every time we put a new movie on Sun NXT, it drives up subscriptions immediately. So, at the current stage, our — all our focus is on movies, but we will certainly — we are in dialogue with a lot of potential producers for web series originals, but I don’t think we’re going to start anything before second quarter of this year," Kumar said.
Narayanan said that Sun NXT monthly active users (MAUs) have grown by at least 40-50% over the last six months. The company has also experimented by premiering three small-time movies on Sun NXT and then on television. "That has been pretty much very good success for us. So that’s the model which probably we might also recreate over a period of time."
In Q4, Sun TV Network reported 8.3% YoY growth in ad revenue at Rs 314.9 crore were up 8.3%. The management said that the second wave has hit ad revenues hard. Ad recovery is expected in Q2 FY22.
"So, Q4, I think we saw some good traction, like I think we had a very good bounce back with their business as compared to the first two quarters. In fact our utilization has jumped sharply during this Jan/Feb/March. And we were — actually were hopeful that maybe the fourth quarter of this year also will be more or less in par with the previous financial year, which was ’19-’20. But I think unfortunately because of the second wave, there has been an impact. I would say, to a limited extent, it is not as bad as what it was last year. But I think we just have to wait and see because I think whether if the overall wave comes down, I think we could see some good traction in Q2,"
The management has guided for a double-digit subscription revenue growth in FY22, aided by continued digitisation in the key market of Tamil Nadu and growth in DTH subscribers. In Q4, the subscription revenues were up 7.4% YoY to Rs 428 crore. The digital cable revenue stood at Rs 210 crore, while DTH revenue came in at Rs 218 crore.
"We should continue with the double-digit growth. That business is doing good because we get to see the traction in a group company which is associated with the Sun Group. So going by the numbers that we are seeing in terms of their own acquisition plans for set-top boxes, I can say with some confidence that we’ll continue to grow at double-digit," Narayanan said.
Under the Vivad Se Vishwas scheme, the company has availed and paid Rs 250 crore against the disputed tax claims of Rs 951 crore, which has arisen due to the difference in treatment of movie amortisation as per the company and tax authorities. The company has also created deferred tax assets of Rs 400 crore, as a result.
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