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Listed media companies show positive growth in Q1 FY14

21-August-2013
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Listed media companies show positive growth in Q1 FY14

The Indian economy is currently facing a crisis with growth slowing down and fiscal and current account deficits running high amid persistent inflation, says a study by an economic think tank. Like several sectors, media too has been adversely impacted by the economic downturn.

However, despite the current gloom, most media stocks sailed through the first quarter of FY14, making up for previous losses and registering profits. exchange4media has attempted an analysis of the Q1 FY4 results of some of the major media houses. We have culled out five takeaways from the results...

Recovering operating losses
There has been a positive reflection on operating revenues for leading media brands for the first quarter ended June 30, 2013.

NDTV Group reported improved operational performance, while consolidated net distribution income turned positive for NDTV Group and NDTV News in Q1 FY14. Operating losses reduced to Rs 12 crore in Q1, even as net losses reduced from Rs 26 crore to Rs 24 crore on a year-on-year basis.

Similarly, Network18 Group announced that its profit after tax for Q1 FY14 stood at Rs 18.9 crore as compared to Q1 FY13 loss of Rs 90.2 crore, whereas their net interest costs reduced by 72 per cent on a year-on-year basis.

On the other hand, consolidated operating revenues for the quarter stood at Rs 556.6 crore on a reported basis. Reported revenues for the television and motion pictures business (including IndiaCast) stood at Rs 396.2 crore for the quarter. Whereas the reported operating profit of TV18 for the quarter stood at Rs 23.8 crore, up 57 per cent over the previous year.

Zee Entertainment Enterprises reported consolidated revenue of Rs 9,733 million for Q1 FY14. The consolidated operating profit for the quarter stood at Rs 2,915 million, recording a growth of 25 per cent over the corresponding period of the previous fiscal. Profit after tax for Q1 FY14 was recorded at Rs 2,239 million, a growth of over 42.6 per cent over the corresponding period last year.

Restructuring on the charts
According to a report issued by NDTV during the quarter, the group faced timing issues, such as postponement of key TV projects to later in the year. It may be noted that this quarter has seen one-time expenses related to restructuring of NDTV Profit. Plans are underway to re-launch NDTV Profit.

Phase I of the restructuring process has been completed, with the channel moving from Mumbai to Delhi. The shift is aimed at enhancing group synergies and containing expenses. After programming changes, Profit reportedly saw a 43 per cent increase in revenue.

exchange4media recently reported that Network18 has laid off around 300 employees from its editorial and technical departments. Some sections of the media have reported that this is part of the group’s re-structuring strategy to cut costs and streamline processes.

Meanwhile, HT Media stated that the company’s employee costs increased by 15 per cent to Rs 105.5 crore from Rs 91.6 crore in Q1 FY13, which is a positive sign from the company’s hiring sentiments point of view.

New launches in the pipeline
As is known, NDTV launched Indianroots, an e-commerce venture offering premium Indian ethnic brands, designs and creations to Indians across the globe. According to the statement issued by the company, in Phase II of its strategy, the channel will continue to remain a business channel during the day time. However, in the evening, it will transform into a completely new channel, which is expected to launch in the next few months.

Coming to the print players, DB Corp recently extended the reach of its Marathi daily Divya Marathi with the launch of its sixth edition in Akola (Maharashtra) and another edition in Amravati (Maharashtra) will be launched soon. As is known, DB Corp sold its entire stake in Divya Prabhat Kiran (an afternoon newspaper in Indore) in order to maintain focus on its high growth business model.

Marginal increase in advertising revenues
After analysing various media results for the first quarter ended June 30, 2013, it is seen that media houses reported marginal gains in advertising revenues despite the tough economic scenario.

RBNL reported 15 per cent hike in its ad revenues at Rs 279.22 crore. The subscription revenues of the company’s channels continued to maintain a significant uptrend with cable TV revenues growing by 38 per cent and DTH revenue growing by 20 per cent over the same quarter last fiscal.

Network18’s ad revenues also grew by six per cent year-on-year. Whereas it’s net distribution income grew 32 per cent sequentially to Rs 34.9 crore this quarter, swinging from a loss of Rs 16.0 crore during Q1 FY13.

ZEEL too saw a decent increase in its ad revenues for the quarter at Rs 5,301 million, a growth of 18.5 per cent over Q1 FY13. The subscription revenues of ZEEL were up 16.5 per cent at Rs 4,241 million for Q1 FY14.

HT Media saw its ad revenues increase to Rs 3,253 million from Rs 2,701 million, reflecting a growth of 21 per cent year-on-year basis.

Increase in digital revenues
Given the growing importance of digital business in media companies’ portfolio, aggressive steps are being taken to shore up revenues from the digital business.

HT Media has reported digital revenues of Rs 17.1 crore for Q1 FY14. In an official statement issued, HT Media informed that digital revenues for the current quarter included revenues of its job portal Shine.com, which has become part of the company following a restructuring arrangement sanctioned by the Delhi High Court on April 18, 2013. Hence, the digital revenues and results are not comparable with digital revenues of the previous quarters and the corresponding quarter last year.

In the previous quarter, HT Media had reported digital revenues of Rs 19.24 crore and loss before tax of Rs 30.51 crore; however, it may be noted here that this includes Shine.com’s Rs 31.2 crore loss. The company’s result presentation suggests that the digital segment saw a 41 per cent year-on-year growth in revenues, with Shine.com registering a revenue growth of 81 per cent YoY, HTCampus.com registering a 39 per cent revenue growth YoY, and HT Mobile registering a 22 per cent revenue growth YoY. There is, however, no word on the exact revenue generated.

During the quarter, HT Mobile Solutions acquired digital marketing firm Webitude for an undisclosed amount. Following this acquisition, HT Mobile Solutions along with Webitude launched an umbrella brand ‘Digital Quotient’, which intends to offer digital solutions. HT Media made two investments in its subsidiaries. These include Rs 11 crore in HT Digital through equity shares.

Digital content and e-commerce business of Network18 grew to Rs 106.9 crore, registering a growth of 174 per cent over the corresponding quarter of the previous fiscal (adjusted for the sale of Newswire18).
 

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