Consolidated operating revenue during the quarter increased 20 percent year-on-year to Rs 1,524 crore
Network18 Media & Investments has reported a 24-fold year-on-year increase in third quarter consolidated profit at Rs 77.16 crore, driven by operating leverage.
Profit in the year-ago quarter stood at Rs 3.19 crore.
"Operating leverage drove profitability, especially led by continued strong performance of regional channels across both our news and entertainment portfolios," the company said.
Consolidated operating revenue during the quarter increased 20 percent year-on-year to Rs 1,524 crore.
What has led our revenue growth this quarter is festive season and the ads...and more importantly films in general, for example, Andhadhun and our first Telugu film Devdas—three or four films that we released this quarter, all did very well. This gave us the robust 23 percent growth in revenue, said Sudhanshu Vats, MD of Viacom18.
"If we look at this quarter (Q4FY19) and the first quarter of the next financial year, I think the (general) election will play a big role for the news business," Rahul Joshi MD, TV18 and Network18.
A complete transcript of the interview is provided below. Else, watch the adjoining video for more.
Q: Can you tell us more about the jump in the operational performance in Q3?
Joshi: I think if you look at this quarter, it has been a very healthy growth of 22 percent in our overall revenue. I think there has been a healthy percentage of growth in EBITDA as well. I think that on the back of robust advertising in the festive season, we have been able to grow our revenues in a good way. We have also been able to reduce our losses considerably and that has led to a fairly positive EBITDA. If you look at the overall news picture, we are the number one news broadcaster in the country with an 11.4 percent share. That is almost a 2 percentage lead over our nearest rival. So we have widened our lead over the number 2 player, and are way ahead of others. So we are established as the number one news broadcaster in the country now for a very long time and some of the advantages are now being seen there.
Q: The reduction of losses in the regional news channels has helped a goodish bit. In fact, I think the losses have fallen from Rs 29 crore to about Rs 9 crore. Is there a chance of it getting into the black there?
Joshi: Yes, absolutely. Next year, we remain reasonably confident that it will be in the black. Over the last three-four quarters, we have been reducing our losses 70 percent on the trot and I think, backed by an aggressive revenue growth of almost 30 percent, last quarter we grew 37 percent. This quarter we have grown 27 percent and I think finally the losses are reducing, and I think that any revenue jump going forward would fall to the bottomline. So I think we are very happy about our regional news performance. It has turned around and it is likely to hit the black very soon.
Q: I want to ask the both of you about future revenues as well especially because it is going to be not just one budget, but two budgets as well election season. I will come to the outlook in just a bit. A more operational question, this unbundling rule by Telecom Regulatory Authority of India (TRAI), you think that will allow us to keep the subscription at 13 percent growth, will there be any problem?
Vats: The new tariff order, which TRAI has come out with in the long-term is good. I think it is good for the industry, it is good for the consumer, it gives choice to the consumer and all that but I think in the implementation phase – I think this quarter particularly and it might take couple of quarters in my opinion, there will be some level of that disturbances where I could say or settling down or teething problems and that could have some headwinds. Both for subscription and we could even see it if there is disturbances when the period in which they are getting implemented, we could see some headwinds on advertising as well. So I think the settling down period will have some headwinds very clearly.
Q: On the entertainment business, revenues have grown by 23 percent. How much of it came from Andhadhun? I liked the movie.
Vats: Andhadhun was a blockbuster. I am glad that you saw it and there are so many people who liked it. I also wanted to let you know that IMDb has rated it as the best film of 2018. But more importantly, it is the tenth best film ever for which we are very delighted. It has done very good business. It was a small film, so profitability has been very high but absolute profits, not as compared to some of the bigger films.
I think what has helped our revenue growth this quarter is – one the festive season and the ads as Rahul Joshi was also talking about. We also had two of our tent-pole properties, Big Boss was there and Got Talent was there and more importantly, films in general and you spoke about Andhadhun but we opened our account in Telugu as well with the film called Devdas, which did quite well. Three-four films, which we released in this quarter all did very well. So that gave us the robust 23 percent growth in revenue. Our EBITDA as well, despite all our investments continue to grow, our EBITDA on business as usual in this period has nearly doubled.
Q: I agree business as usual EBIDTA has done well. I think it was more because of the loss on Colours Tamil and the newly launched channel?
Vats: We have launched three channels, so Colours Tamil is an investment which is continuing which was launched earlier. But we also introduced Colours Kannada Cinema which is a movie channel in Kannada and towards the end of the quarter, we introduced Colours Gujarati Cinema which is our entry into Gujarat.
Q: Would that explain this: if I looked at the consolidated numbers the income growth quarter-on-quarter, the income is fairly good. It has gone from a Rs 120 crore to Rs 146 crore but expenses also have gone up almost similarly and that is largely operational cost. What would that be?
Vats: It is the new channels which we have launched, it is investment in content which we are continuously making and it is also the movies which we did in this period. So, I think it is overall broadly investment in content which we are continuing to do.
Q: We are counting on a fairly important set of events for the news guys. Do you think it will generate revenue subscription?
Joshi: I think, if you look at this quarter and the first quarter of next financial year I think elections will really play a big role for the news business. Even though Sudhanshu Vats talked about the softness that we are witnessing in January and probably also in the next one or two months thanks to the implementation of the new tariff order I think this one event will help us in the last quarter of this financial and the first quarter of next.
The government revenue is up across the board thanks to our regional channels doing very well aided and abated by in some measure the elections in the last three state elections and now the general elections. I think there will be ancillary activity around elections political parties will advertise. We will do some tentpole properties, events so all that would add to some amount of robustness in the revenue and in this last quarter of this financial and in the first quarter of next.
Q: Does it usually drive digital revenues?
Joshi: It also drives digital revenues maybe more in the case of broadcast less in the digital, but it does have a solitary impact on digital as well. Don’t forget that while we will take a little bit of a hit in this quarter because of Vote on account not a full Budget, but next year we will have two full Budgets not one. So, that is good news for the next year as well. If economy and you would know better if economy does well, market behave I think we would see some amount of buoyancy in advertising going forward.
Q: I just spoke to a conference of Paint industry guys, even other industry other than autos almost everyone is speaking about fairly good demand. So, hopefully it should translate, you can feel it in advertising?
Joshi: I do think that the last quarter has been good, this quarter also would have been decent again now because of this new tariff order, unbundling one or two months maybe a little uncertain but we do feel that the economy is robust. I don’t see any reason why it should not do well in the next couple of quarters.
Q: Anything else like Andhadhun on the anvil?
Vats: Two things, one is the digital piece, so our Voot app continues to do very well. There are two-three things I wanted to let you know about that our daily views on Voot are crossing 25 million plus. We are getting a substantial scale. Particularly for ad-led video on video platform, that is wonderful. By the way all news channels are there on Voot as well so you should sort of enjoy them.
Lastly on Voot, a good thing which has happened is that in our last two years our reliance on our tentpole was very high. Which is let us say Big Boss, this year around we are getting a more holistic views which is very good so therefore regional is picking up, different things are being watched so on and so forth, so that is really good news. On Voot we are launching -we are in beta for our product on Voot kids which is something which all the parents who have young children should look forward.
Q: Any movie, any blockbuster that you want to share or keep a secret?
Vats: We have Thackeray coming up. This is the first time in recent history where Hindi and Marathi is launching at the same time.Disclaimer: Network18 is the parent company of TV18 Broadcast and Network18 Digital that publishes Moneycontrol.