TV18 Broadcast swung from loss to profit when its reported its quarterly profit yesterday. Net profit for Q2 stood at Rs 7.3 crore versus a loss of Rs 1.1 crore a year ago and Rs 14.2 crore loss in Q1 of the current fiscal. Revenues were up 4 percent despite goods and services tax (GST) blues, though in Indian Accounting Standards (Ind AS) terms revenues fell a bit.
In an interview to CNBC-TV18's Latha Venkatesh, Rahul Joshi, CEO - News and Editor-in-Chief of Network18, and Sudhanshu Vats, Group CEO of Viacom18, spoke about the results and outlook for the company.
(Disclosure: Network18 is the parent company of TV18 and Moneycontrol)
Below is the verbatim transcript of the interview.
Q: If you could break up the revenue, how did news do and how did entertainment do?
Joshi: It has been a soft quarter for news. We have been down 9 percent this time largely because of the implementation of Goods and Services Tax (GST).
Q: Down in revenue, not in viewership.
Joshi: In revenue, not in viewership. Viewership we are rocking and I will come to those numbers as well. However, we are down in terms of revenue because of implementation around GST and there has been a pullback from our advertisers this quarter. I think that softness was largely because of this. July was a really bad month, but I think that things are looking up now in this quarter. The first month is off to a better start, so, we hope that we recover from here. However, news has been soft as I explained the reasons.
Q: What about entertainment, revenues have grown reasonably well but expenses also have.
Vats: The revenues have grown, but we have also delivered an improvement. So our revenues have grown at about close to double digits in a quarter like this buoyed by the success of our film ‘Toilet Ek Prem Katha’ which is the biggest film of the year till date on box office. Ad sales as Rahul rightly pointed out, was soft, but within that if you look at the story, July was not a very good month, August was average, and September was a much better month. So it seems to be coming back, the impact which was there. So I think that is the story overall on entertainment.
The other piece, even on our earnings, while we have grown our topline at about double digits as I was telling you, our EBITDA has grown in high teens. So it is basically both which has grown as we go forward.
Q: Let me come to the split in the news channels itself. Where is it that the revenues are better and where is it that revenues need to catch up, where was the GST impact most severely felt?
Joshi: The GST impact was felt across.
Q: Across languages, English, national, regional.
Joshi: I think the languages were a little worse off than the rest because in languages even the government revenue is under pressure. Government revenues do well when there are elections, so, I think in the next two quarters I think the situation would be better. I think in the last two quarters, the government revenue is also under a little bit pressure. However, if we look at the corporate retail revenue, it is flat for most part whether it is business general or regional news.
However, if you look at the bigger picture and the bigger picture is how we have done in terms of ratings. The bigger picture is solid, I think we have increased ratings across our entire portfolio. Your channel always does very well, CNBC-TV18 where we have consistent 55 percent market share whichever way you look at it. In market hours, it is up to 63-65 percent. CNBC- Awaaz, similar story.
I think regional we have increased our viewership from about 2.9 percent same quarter last year to about 5 percent today. I think that is a significant jump. So regional portfolio also looking very healthy. Hindi News18, our channel News18 India is doing very well. It was about 5 percent last year, the market share is more than 10 percent today. So, that really is a big one. We are amongst the top five Hindi channels now.
If you look at prime time, we are in the top three often beating the Aaj Tak and all other market leaders. So I think the overall ratings picture is good.
Q: Since the ratings picture is good, do the softness in ad revenues get compensated somewhat by improvement in subscription revenues?
Joshi: Subscription revenues have always been fairly strong for us and that has been the case even this quarter. However, I think it is the advertising revenue that is really under pressure.
Q: Are you seeing any difference at all of the GST impact waning?
Joshi: As Sudhanshu explained, July was the worst month. Since then, things are looking up. September has been a better month, October is definitely looking up. We hope that the festival cheer this month will make the revenues stick. And I think the second half of this year, we hope to grow in double digits. That is broadly the picture as it looks today.Q: What about ad revenues in the entertainment space? We are on festive season, does it show any improvement, does it show a waning of GST impact?
Vats: Waning of GST impact is there as I told you earlier as well. July was a very poor month, but September was a good month, August being average. October, up to now is looking good; I think the test would be in November after Diwali is over and we need to focus on that. However, the good news from an entertainment perspective is that now we are beginning to play a portfolio and portfolio from two senses. One is within if you look at our TV portfolio, what has happened in this quarter where ad sales has been under pressure, some of our segmented channels have delivered very strong double digit growths and that managed to help us deliver ad revenue growth.
As I was telling you, our film entertainment business on the overall portfolio of our entertainment has come and managed and delivered very handsome growth and that has allowed us to deliver a 10 percent or double digit growth in our entertainment business.
Q: You spoke about the second half having two things which can be a source of revenue, elections as well as Budget. Should we do better than just a pro rata? First half it is Rs 1,312 crore, do we do much better than double?
Joshi: I would not put any number to it, but I think yes in the second half we should definitely do – if all things favour us, if the macroeconomic factors also are with us, I think we should grow in high double digits. That is our hope.
Q: How does the second half look to you at the entertainment level?
Vats: As Rahul said, we are hopeful of growing in strong double digits in ad revenue and we also have as you know Padmavati, our next big release coming up, it is scheduled for release on December 1, it is a big film. So I think overall revenue growths in the second half should be very encouraging.
Q: Finally to the digital piece. We have got scaled up Moneycontrol, as well as Forbes and Firstpost. How is it doing in terms of footfalls, and more importantly revenues, are they now break even candidates?
Joshi: The revenue picture for digital in news has been very encouraging in the first half. The first quarter we grew almost 26 percent. Despite the times and the GST implementation, we have grown 19 percent in the second quarter, Moneycontrol, Firstpost, and News18.com, these three properties put together. So I think that is a very encouraging sign. In terms of traffic, in terms of PVs Moneycontrol is number one today. So there is no problem with that.
Firstpost has been number four and number five consistently, an opinion driven site, a niche player. So it is very encouraging that it is competing with the big boys. The most encouraging is that News18.com is now in the top three whichever way you look. So if you were to just look at desktop, we are number two, just behind Times of India and ahead of NDTV. Overall, combined, desktop and mobile, we are amongst the top three sites in the country. So in the last one year it has really shot up the ranking charts.
Latha: Finally, just a word on the Network18 story as well. Will you be monetising any properties there? Any plans?Vats: I would not like to comment on that, but very quickly, let me talk to you about our entertainment piece in digital as well, as you know, Voot which we launched last year. We now have gross downloads of our app in excess of 42 million and this number is rapidly growing as Bigg Boss is on air as you know. That is doing exceedingly well. And the revenue on this is also very encouraging. The sequential growth quarter on quarter, with Q2 having the impact of GST has actually been strong double digits in revenue. So overall piece growing very strongly. Network18 has many plans but there is something which I would not like to share at this moment.