Network18 looks at Hindi film, regional space in television

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Network 18 See previous management interviews See what other Experts & Brokerages are saying about Network 18 Network 18 BSE | NSE 30/05/12 Are Mutual Funds betting on Network 18? Other Stocks in this news TV18 Broadcast | Den Networks | Television Eighteen |

The Network18 Group posted a 21% rise in consolidated revenues for the financial year 2010-11 to Rs 1,484 crore. For the fourth quarter (January to March) the company's revenues grew 15% to Rs 406 crore over the corresponding quarter last year.

The company has got the approval for the scheme of arrangement between Television Eighteen India , IBN18 Broadcast , Network18 and other group companies and their respective shareholders and creditors. Commenting on the same, Group CEO Harish Chawla said the scheme should firm up in the next few weeks.

The media major's stake in DEN Network and Yatra has been on the block for some time now. Talking about plans in that front, he said, "Yatra has been doing extremely well over the last few quarters. So, we hope to see some kind of promising exit from the company in the next couple of quarters or so. We are also in the process of monetising DEN stake."

Further, Chawla also stated that the company was looking at Hindi film and regional space in the television segment.

Also read: Network18 posts Q4 consolidated loss at Rs 44 cr

Here is a transcript of the exclusive interview with Harish Chawla on CNBC-TV18. Also watch the accompanying video.

Q: When is the scheme of arrangement coming to fruition, what is the record date?

A: Actually the High Court has cleared the scheme. I think we are waiting for a couple of statutory process to get done. So, we should have the whole announcement and everything locked-in in the next week or so.

Q: Subscription revenues appear to have done reasonably well. It's an 11% share of the total sales. Do you see it rising? What is the trajectory for this?

A: We have put together this venture Sun18, in which we have started collecting subscription revenues on our own. That kicked-in in August last year. So, the bigger impact of it will come starting this August-September. And we should see a significant rise over the next two years in our subscription revenues and get it closer to what our peers in the broadcast space are getting, which is closer to between 25% and 35% of their overall sales. We hope to trend to that number over the next two years or so.

Q: In that context, how would you view this Star-Den and Zee-Turner JV? Do you think that will impact the Sun18 distribution?

A: It is a significant development for the industry. I think it's just too early to see what the implications are and how this is going to play out. Therefore, we are waiting and watching and seeing how this space turns out. But we are very comfortable with what we currently have in place. Sun18 is doing pretty well and is on the trajectory of the growth path that I was talking about.

Q: You had said that both DEN and Yatra stakes were on the block, any timeline for the stake sale?

A: Yatra has been doing extremely well over the last few quarters. They have raised some money as well. So, we hope to see some kind of promising exit from the company in the next couple of quarters or so. On DEN as well we are in the process of monetising that as we go along.

Q: Any further channel launches, Hindi movie channel launch from Viacom18?

A: Viacom18, we have announced that we are looking very closely at the Hindi Movie channel space as well as the regional space. No more information that I can reveal at this moment. But you will see announcement on both these fronts over the next few quarters.

Q: Advertising revenues, how do you see it growing both for the news channels and for the entertainment channels, what is the trajectory for both of them?

A: I think advertising there is buoyancy in the market. We have seen advertising growth pretty strong ever since we have come out of the recession. And that seems to continue. Advertising growth on entertainment ofcourse has done very well. On the news front, the buoyancy in the premium segment of the market has helped CNBC quite a bit. And all is looking pretty good overall.

Q: IBN18 is clearly in investment mode right now. The gross debt has risen to about Rs 550 crore despite healthy operating cash flows. What do you think is the upper ceiling for this investment through the debt rout, clearly interest costs have gone up so that would be a bit of a concern?

A: The debt rise that you are seeing in the Viacom18 balance sheet is a result of a reclassification of the movie library that was there in the Indian film company that was acquired by Viacom18. So, it's not an actual debt that's been added on. It's a reclassification of the library which is now being treated as a piece of working capital.

(Note: Web18, which owns Moneycontrol.com and Indiaearnings.com, belongs to the Network 18 Group)