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Network18 reports highest ever EBITDA margins in COVID year; net profit up 9 times in FY21

Television business reports highest ever EBITDA margins as ad revenues return to growth trajectory; Digital News breaks even; subscription remain resilient

April 22, 2021 / 11:29 AM IST
 
 
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Network18 Media & Investments reported a more than 9-fold jump in net profit to Rs 547 crore for financial year 2021 boosted by expanding margins in the television news business and the digital news segment breaking even.

The company shrugged off the COVID impact to grow domestic advertisement revenues while keeping a tight leash on costs. Increasing television viewership and digital consumption after the pandemic have also contributed to the improvement in financials.

Full-year EBITDA (earnings before depreciation, interest, taxation and amortisation) for the group rose 29 percent to Rs 796 crore  despite revenues dipping 12 percent in a year struck by the COVID-19 pandemic.

The group reported its highest EBITDA margins of 17 percent, up 5.4 percentage points from a year ago, thanks to cost controls. Higher operating profitability and a one-third reduction in interest costs led to net profits jumping over 9 times from the previous year.

This also allowed the group to pare debt to Rs 2,414 crore at the end of 31 March 2021 from Rs 3,265 crore a year ago.

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“The group has successfully dealt with the challenges posed by the COVID pandemic and posted much-improved profitability in a difficult year. The connect of our diverse brands with consumers has only grown during this period," Adil Zainulbhai, Chairman of Network18 said.

TV Business reports robust growth

Among its subsidiaries, TV18 Broadcast Ltd, which operates a 56-channel network - the broadest in India, reported a consolidated EBITDA of Rs 808 crore for FY21, up 15 percent. The company also reported its highest ever EBITDA margins of 18 percent thanks to cost controls. Thus, its net profit increased 79 percent from a year ago despite the 13 percent dip in revenues in the COVID year. What’s encouraging is that the TV viewership has increased with the number of households with access to television increasing to 210 million from 197 million in 2018, according to BARC.

Within the television business, margins in TV News nearly doubled to 16 percent in FY21. Although overall operating revenues in this segment contracted 4 percent, advertisement revenues grew through the year despite TV News ratings remaining under blackout since October 2020.

The growth in ad revenues had recovered to high single digits in the fourth fiscal quarter of FY21 and drove a 5 percent growth in overall revenues during this period. In this quarter, margins in the TV News business reached around 27 percent.

TV Entertainment segment shines

The TV entertainment business, too, reported robust financial performance with full-year margins growing to 19 percent, the highest ever. Operating EBITDA rose 4 percent despite a 16 percent fall in revenues for the full year.

Still, ad revenues are back on track in this business as well. Entertainment advertising ex-live-events (which were deferred) has grown in high single digits, as recovery from COVID was cemented with a full roster of original programming, said a statement from the company.

What’s also encouraging is that the entertainment business increased its viewership share by 2 percentage points to 10.9 percent. The flagship general entertainment channel Colors returned to a No 2 position during the year.

Digital takes centre stage

In Digital News, revenues grew 29 percent in FY21; this segment broke even at the EBITDA level for the full year. Indeed, revenues rose close to 50 percent year-on-year for the third consecutive quarter. This segment returned to profitability at the operating level reporting an EBITDA of Rs 3 crore.

Network18 Digital News is a clear #2 player in News/Information category. Positives from increased salience of the medium for advertisers have been accentuated by the growing stature and reach of our platforms, said a statement from the company.

Overall subscription revenue remained largely resilient to COVID impact, and grew 1 percent in FY21, but it remains the next engine of growth, the company said.

Voot and pay products Voot Select and Kids have demonstrated strong traction, with Voot Select being the fastest to reach 1 million B2C subscribers in its first year, it added.

Disclaimer: Network18 is the parent company of TV18 Broadcast and Network18 Digital that publishes Moneycontrol.
Moneycontrol News
first published: Apr 22, 2021 08:56 am

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