Viacom18 registers four-fold jump in FY20 net profit at Rs 353.5 cr

Total income jumped to Rs 3886.16 crore compared to 3671 crore in the trailing fiscal

e4m by Javed Farooqui
Published: Nov 13, 2020 9:11 AM  | 4 min read

Entertainment network Viacom18 has registered an over four-fold increase in FY20 net profit at Rs 353.5 crore compared to Rs 81 crore in FY19, according to the company's audited financial results.

Total income jumped to Rs 3886.16 crore compared to 3671 crore in the trailing fiscal. Total expenses declined to Rs 3451.2 crore from Rs 3578 crore.

Advertisement sales, subscription, and programme syndication revenue remained flat at Rs 3461.42 crore compared to Rs 3432.5 crore. Film distribution and syndication revenue increased to Rs 278.1 crore from Rs 217.4 crore. The company's other operating income registered an eight-fold increase at Rs 132 crore compared to Rs 14.9 crore.

In terms of operational expenses, the company incurred a programming cost of Rs 2036.7 crore as against Rs 2095.1 crore. Marketing and advertisement costs saw a marginal increase at Rs 444.2 crore compared to Rs 428.5 crore.

Transmission and uplinking costs stood at Rs 113.1 crore compared to Rs 110.6 crore. License fees paid during the fiscal year were Rs 28.85 crore compared to Rs 27.47 crore in the previous fiscal. The company's other distribution cost was Rs 165.4 crore as against Rs 180.4 crore.

Viacom18 is a subsidiary of TV18 Broadcast Limited (representing Network18 Group, India) which owns 51% of equity shares. 41% of equity shares are owned by MTV Asia Ventures (India) Pte Ltd, Mauritius, and the remaining 8% equity shares are owned by Nickelodeon Asia Holdings Pte Ltd, Singapore (together representing Viacom Inc. Group, USA).

The company is engaged in the business of broadcasting of televisions channels, distributing, marketing, and selling commercial advertising on ‘channels’ - Colors, Colors Rishtey, Colors Cineplex, MTV, MTV Beats, Nick, Nick Jr., Sonic, VH1, Comedy Central, Colors Infinity and a regional bouquet of channels.

Additionally, the company also generates revenue from licensing and merchandising of products, brand solutions, organising live events, Over The Top (OTT), and digital content delivery platform and marketing partnerships. The company is also in the business of production and distribution of motion pictures.

Meanwhile, rating agency ICRA had recently reaffirmed Viacom18's credit rating for a total amount of Rs 2,110.7 crore. The credit facilities comprised of the commercial paper programme of Rs 500 crore and Short-term, Fund-based/Non-fund Based Bank Facilities of Rs 1,610.7 crore.

According to ICRA, the rating reaffirmation factors in the company’s strong parentage with Reliance Industries Limited (RIL) through its step-down subsidiary TV18 Broadcast Limited holding a 51% stake in Viacom18 Media and the balance stake being held by Viacom Inc.

It added that the rating also reflects the strategic importance of the media business to RIL. Independent Media Trust (IMT), of which RIL is the sole beneficiary, holds a majority stake in Network18.

Despite the adverse impact of Covid-19, which resulted in a YoY decline of 26% in Viacom18’s advertisement revenues during H1 FY2021 (as per standalone provisional financials), the company was able to report a strong YoY improvement in its standalone operating profit margin (OPM) to 13.1% during H1 FY2021 (as per standalone provisional financials), against an OPM of 8.6% in H1 FY2020, driven by broad-based cost controls.

The report noted that Colors, the flagship channel for Viacom18, remains its mainstay with differentiated content both in the fiction and non-fiction categories. The company’s ability to maintain the leadership position of Colors will be critical to maintaining its overall profitability.

It also stated that the company has iconic brands in its portfolio such as MTV, Comedy Central, VH1, and Nick, which has helped it carve a strong and niche positioning in their respective segments.

Furthermore, the children’s genre has continued to demonstrate healthy financial performance (as indicated by the management) on the strength of its owned intellectual property rights (IPRs) and maintained its dominant position in the genre.

The company’s presence in the regional entertainment genre provides diversity in revenues and gives it access to significant growth potential in the RGEC space. Furthermore, it launched a Tamil GEC during FY2018, a market with high potential, and regional movie channels (Kannada, Gujarati, and Bangla) during the past two fiscals to expand its regional presence.

Improving market share of the regional channels and consequent scaling up of revenues of the portfolio will be important for the overall improvement in revenues and profitability of the company, ICRA said.


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