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May 25, 2012, 07.32 PM IST
Sun TV has reported its fourth quarter numbers. The company’s net profit came in at Rs 159 crore versus Rs 208 crore (QoQ) while the income from operations stood at Rs 427 crore versus Rs 425 crore (QoQ).
In an interview to CNBC-TV18, SL Narayanan, group CFO, Sun TV talks about his company’s fourth quarter results and what the road ahead looks like in FY13.
Below is an edited transcript. for more.
Q: Give us the subscription revenue and how exactly did the analogue cable do this quarter?
A: The analogue cables have actually not done too well because we have a continuing stalemate with Tamil Nadu Arasu cable corporation. Talks are continuing. So we have taken the full impact of not accruing revenues which are normally tracking at about Rs 11 crore a month. When you see the results for the current quarter this needs to be seen in the light of that extraordinary event. The talks are continuing with Arasu Cable Corporation and we hope that it will get concluded very soon.
Q: So there is a one time impact of Rs 30 crore of revenue loss I would assume approximately for this quarter then?
A: That’s right and since it is more in the nature of an annuity income it’s almost hit the bottom line as well.
Q: What would this do to your margins then? How exactly have you performed on the operating margin front?
A: Despite the continuing impact of not earning revenues from the Tamil Nadu analog cable business I think our margins have held up and in that lies the real attraction of business model because the core ad revenues have continued to hold up despite the slowing economy. In fact if you look at the full year advertising revenues, they have slipped by just under 3% and if I look at similar companies in the same space, the listed entities, I would say our rate of de-growth is amongst the lowest.
Q: How you have done on the advertising revenue front, because last quarter you saw a 7% decline. This quarter how did you do on a YoY basis as well as possibly sequentially?
A: Sequentially, the March quarter is normally a very muted quarter, because in India the festivals get bunched up between October 1 and December 31. So we have the Durga Puja, Diwali, Christmas, New Year’s Eve, everything happens and that’s a big quarter for almost all the white goods manufacturers and others. In that sense there is normally a dip in the March quarter when compared to the December quarter. So it is nothing extraordinary. We have therefore declined about 3.9% which is inline with the normal trend. But what I really want to emphasize here is we have had a very ifficult year on the ad revenue side.
Q: 4% decline is on a year-on-year basis or a QoQ basis?
A: QoQ, it’s the March over December quarter.
Q: The subscription revenue of around Rs 30 crore is not included in the topline then?
A: That’s right.
Q: Throw some light on what exactly would be the progress to possibly solving this problem with Arasu Cable going forward? When can we expect the negotiations to culminate into something solid?
A: Yes, basically talks are continuing. The corporation itself started business towards the end of September. We are a fairly dominant player in the television space in the state of Tamil Nadu. It’s taken longer for us to reach a conclusion. So, we hope that in the next few weeks we should be able to conclude the agreement.
Q: Can you throw some guidance for us on FY13? What can we expect in terms of advertising revenues and possibly subscription?
A: On the advertisement revenues, we are still going through some very turbulent times. I don’t think we are going to see a big revival in a hurry. So at least till the June quarter we don’t see any dramatic reversal of the trend line. Hopefully, by September we should have a better sense of what this year is going to be like. At this time I would say that we will probably be looking at a very modest increase, perhaps a low single digit increase.
Till such time we complete the first quarter of FY13, I don’t think we can give any reliable trends. As regards the subscription revenues, a lot rides on the digitization initiatives. Suddenly we hear that that date maybe pushed out instead of June 30. It might be delayed in certain cities like Calcutta and Chennai, but the good news is nobody is saying that this is a bad thing.
So if not June 1, September 30 or December 30, I think that is going to create a very beneficial impact on everybody’s P&Ls in the broadcast space and that’s something which in my mind could be a game changer for the media business in this country.
Q: Any sort of blockbuster movies we can expect in FY13 to make up any sort of advertising revenue decline?
A: No, in fact there are no plans to produce any movies at this time. The industry itself is going through some major reorganization and difficult times. We have been focusing on the core business of advertising as well as pay TV revenues and hopefully by the next quarter we should have better news to share with you.
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