The fact that subscription revenues have gone up shows that the new tariff order has been beneficial to the broadcasters, Rahul Joshi, MD of Network18 Media & Investments and TV18 Broadcast said in an interview to CNBC-TV18 on the quarterly earnings.
October has been better than the last couple of months as far as advertising revenues are concerned, but it is still not as good compared to last year, said Rahul Joshi, Managing Director, Network 18 Media & Investments, and TV18 Broadcast.
“I think the consumption story – I do see some challenging months ahead as well. So I think advertising, display advertising will remain under some kind of pressure though October as a festive month, has really picked up for us,” Joshi said in an interview to CNBC-TV18 on the quarterly earnings.
He said the investments made in the digital business over the last couple of years were now beginning to pay off.
Edited excerpts of the interview:
Q: Subscription is doing very well, do you think we can sustain this 43 (percent), last quarter it was 48 (percent), it is a fairly handsome pace, can it be sustained?
RJ: I think the fact that subscription revenues have gone up just shows that the new tariff order has been beneficial to the broadcasters. Looking after the news business, I feel very happy that we are not free-to-air. Our customers, our viewers are paying for the news that we dish out, which is very good for us. So it is a very good development for us from the news and from an entertainment point of view.
Q: I just want to know if we can sustain it, but more importantly it is ads, the weaknesses, it is not a surprise at all – every company that comes on the channel has spoken about a slowdown in consumption. But how bad is it and are you seeing any green shoots in October with the festival season starting?
RJ: We definitely see green shoots in October. This month has been much better than the last two months. We have really seen some tough economic conditions in the second quarter. This month while it has been good, I will add a caveat, I think it is not as good as October of last year. So there is definitely the impact of slowdown that is being felt.
I think the consumption story – I do see some challenging months ahead as well. So I think advertising, display advertising will remain under some kind of pressure though October as a festive month, has really picked up for us.
Q: It doesn’t work this way that people are now hard-pressed to gain market share or maintain market share and therefore, advertise – it doesn’t work negatively and positively for us?
RJ: I don’t really think so. Advertising is something in a slowdown that is the first thing that goes out. It is very often also the last thing that comes back. So we have to be careful but at an overall level, the subscription revenues are sustainable. This new tariff order and its implementation have helped the broadcasters, that is definitely good news.
Q: You have certainly controlled costs – I should say we because there has been control on costs, employee costs and resources costs?
RJ: Absolutely. There has really been a good check on the costs in the last quarter. We have been doing this over the course of the last year and the benefits are now beginning to show. I think these will also show in the subsequent quarters. Because of that, we have been able to maintain our profitability, our regional news is well on its way to profitability and breakeven. That is good news. I think regional and Hindi news – we have also grown. It is the English, the business piece which has not.. (interrupted)
Q: …the old cash cow which is not growing.
RJ: That is right.
Q: I just want to ask you, this is also election season in the sense there are a couple of state elections and then, of course, there will be Q4 which will be budget. So what is your view of the second half?
RJ: I think Q3 will continue to remain tough given the conditions. I think the Q4 is usually good for news because we have a budget in that quarter, we have a lot of branded content properties that all stack up into Q4. So it’s typically the second half. Hopefully, sentiment will also pick up. I think the government is taking some measures, they are seized of the problem and they have acted in the past. So the next two quarters, I look forward to them with hope and optimism but I would definitely like to say that the conditions are tough; we have seen a very-very tough quarter and things while they may be easing up, I would say that we should also be careful in the coming two quarters.
Q: Coming to the entertainment part particularly because Q3 is good for you. So first tell us how has the Q2 been for Voot, how have been the downloads and what are you looking forward to in this festival season?
SV: As far as we are concerned, just building on what Rahul was saying, I think Q2 has been, from a revenue point of view, a mixed story; advertising has been under pressure and we talked about that but the subscription has been really good and that’s a good thing. Therefore, overall if you look at the end of the first half, we are sort of, on revenue holding on but importantly because of cost control one thing which is very heartening and this is the process we spoke about just now as well. In entertainment, we are beginning to now make solid movements as far as profitability is concerned. So because of all the cost controls which we have brought in place, the fallout of a tough year has been that as we exit FY20, we are likely to nearly double the profitability of our entertainment business.
Q: Which are the streams?
SV: Across the board, the point is that we have tightened everywhere on different lines. The second interesting thing which is the fallout of this tough year is that we are making rapid strides in digital, to very specifically your question on Voot. I think Voot now is beginning to deliver over 30-34 million daily active users which is a very good thing and with Bigg Boss now coming in, we are now looking at between our own numbers and our partnerships and a monthly active user base in October which we are projecting of upwards of 80 million and if you remember, I had talked about this number earlier. So it’s a rapid improvement of about 50-60 percent. So these 2 are very important. Our strategic shift towards building a strong digital portfolio and considerable substantial improvement in profitability are two really good news in his overall slightly dark cloud of the previous quarter.
Q: You have two phrases that caught my attention. Original content behind the paywall and kids edutainment product. Now out there in the world, Netflix is making money, BYJU is making money, should we believe these two can become income generators -- original content behind the paywall and edutainment?
SV: You are absolutely right. This is where we are going to further build our digital portfolio. So, Voot Kids has now gone live, behind a paywall. Our payment systems are currently working more on iOS, we do not have those many functionalities on Android, but our first set of this thing is extremely good.
We are going commercial with Voot Kids which is our kids’ platform in this quarter. So, you will see that hopefully a month down the line. We are doing the beta launch of our paywall service for adults. So, basically our Voot paywall service where originals will come, where you will have to come behind a paywall and there will be three functionalities there, there will be originals, there will be good international content, and there will be linear channels and ad-free video-on-demand (VOD) which is available. So, I think that proposition is also looking good.
Q: So you are hoping that that can be a money-spinner?
SV: In future, I think. So we are building a strong foundation on digital with advertising led products, subscription led product and kids product. All three are coming into play.
Q: How is the digital business doing, I mean Moneycontrol, Forbes, and Firstpost?
RJ: We have invested in digital over the last couple of years thinking that it will pay off in the long run and I am happy to report that we have indeed done well in this year where there has been a problem with advertising.
Moneycontrol has launched a very successful subscription product called Moneycontrol Pro. It is doing exceptionally well for us. As these subscription products go, people are not even getting subscribers in tens or thousands, we have 85,000 subscribers and counting; that is just in five months. So, I think that is a big story.
News18.com, we have launched in 11 languages in the last one year. On mobile, in languages we are number one. In most of the regional languages in News18.com we are in the top three.
Our overall television share has also grown from 10.1 percent to 10.9 percent after the new tariff order (NTO). I think that is also good news. So, overall the health of the business is good. I think we are waiting for better times ahead to be able to monetize some of these assets.
Q: I was just going to ask you, how much of this is monetisable and therefore, will Network18 be in the black very soon?RJ: We all hope that it will happen because I think we are opening new revenue streams like subscription revenues even in digital like MC Pro, Voot, as Sudhanshu was saying, is going to go live next month. So, I think there are new revenue streams coming up and we are hopeful that if the health of the business is there, if our ratings are good, if our numbers hold, and if our traffic grows, I think we will sooner or later monetize these products.