See strong Q4 earnings; may hike ad rates in Aug-Sept: ENIL

Entertainment Network India's (ENIL) fourth quarter looks reasonably strong amidst challenging economic environment, says Prashant Panday, ED & CEO of the company. Advertising and media industry have done better than expectations, he says.

Also Read: PVR sees upswing in biz, higher ticket prices ahead

Meanwhile, the company will not hike advertising rates in the next two-three months. "We will hike the ad rates in August-September this year because the signs are good, the volumes are remaining high and there is no more volume to grow,” Panday says in an interview to CNBC-TV18

Below is the verbatim transcript of Prashant Panday’s interview on CNBC-TV18

Q: How exactly is Q4 looking for you because it seems Q3 was very strong because of the Gujarat elections, volumes were higher, pricing was lower? What are the key parameters that we are looking out for in Q4? How did it pan out?

A: Surprisingly, Q4 has been a reasonably strong quarter. It is surprising because the economy has not done any better than it did in the earlier quarters but the advertising business has done slightly better than what most people expected. Certain sectors have shown resilience - real estate for instance or durables that came back in a big way. The government was a big spender by itself or the auto sector. Some of these sectors have shown a lot of resilience. Overall, media industry has done better than expectations. Radio has done better than most other media segments.

Q: One radio company is looking at a 20 percent increase in advertising rates. Is something like that possible? The complaint is that they have an inventory crunch and you also used up most of your inventory in fourth quarter. What kind of rate hikes can you charge?

A: Under normal circumstances, this supply-demand logic is how media pricing is driven and when supply becomes a problem, when your inventory is running full then pricing goes up. In the last few quarters, supply seems to know no limits. Today, there are broadcasters who are doing 25-30, even 35 minutes of advertising in an hour in the peak season. Due to that, price increases have not really happened across the board in the radio industry. A couple of players have made some price movements but that’s primarily because they were on a very low price base, not commensurate with what the listenership numbers were. It’s more a correction than a move.

Q: Are you not expecting that you would be able to manage a price hike anytime soon?

A: Not in the next two-three months, but certainly in August-September this year because the signs are good, the volumes are remaining high and there is no more volume to grow. So, August-September, we will see a price increase happening.

Q: What are you planning to do in FY14, the current quarter and for the full year in terms of volumes and realisations? How much might revenues do?

A: I am going to wait with my fingers crossed for phase three rollouts to happen. You can already see that I have started to talk about phase four because I have been waiting for phase three for so long, but maybe that’s an unlikely number. Maybe in September-October, phase three biddings happen and that is the most important thing.

Q: When exactly are you expecting something formidable on phase three? What have your interactions with the government thrown up?

A: There has been a last minute snag in the Ministry of Information and Broadcasting which has delayed this process by maybe another month or so. If that had not happened then the process should have got kicked off now. This means, if everything gets kicked off a month later, I think the bidding should happen by September-October, thereabouts.

Q: If you got a bunch of licences in October, by how much will that boost the revenues?

A: Not really in this financial year. It will take 6 or 8 months to launch the stations after the auctions happen.