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Viewership growth and ad-revenues from regional portfolios reduce dependence on national channels, says Network 18 MD Rahul Joshi

Viewership growth and ad-revenues from regional portfolios reduce dependence on national channels, says Network 18 MD Rahul Joshi

Viewership growth and ad-revenues from regional portfolios reduce dependence on national channels, says Network 18 MD Rahul Joshi
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By Latha Venkatesh  Oct 15, 2018 6:34:30 PM IST (Published)

Network18 Media and Investments Limited has narrowed its second-quarter consolidated loss to Rs 67.87 crore compared to a loss of Rs 113.17 crore in the previous quarter on strong revenue growth and improved operational performance. The company posted a 59 percent jump in the operating EBITDA to Rs 92 crore in the quarter gone by.

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TV18 Broadcast Limited, a unit of Network18 group, also reported its second-quarter earnings on Monday.
TV18, which operates channels like CNBC-TV18, CNBC Awaaz, CNN-News18, posted a 451 percent jump in consolidated profit to Rs 40.36 crore in the quarter. Consolidated revenue rose 11 percent to Rs 1,198 crore in the second quarter of the current financial year.
Regional channels drove viewership growth and ad-revenues for the portfolio, that reduces our dependence on national channels,” said Rahul Joshi, MD, TV18 and Network18.
EBITDA has grown 42 percent, it shows that finally regional is paying for us, we have been saying this for a long time, Joshi said. "We have been able to cut our losses, we have been able to aggressively grow revenues across the board both for entertainment and news and I think that is showing up," he added.
In an exclusive interview to CNBC-TV18, Joshi and Sudhanshu Vats
MD, Viacom18, discussed the Q2 earnings and the future ahead.
Edited Excerpts:
First up revenues, is subscription doing well, are advertisements doing well, what is going right?
Joshi: This is the quarter where we have seen subscription and advertising revenue both doing well for us. We have seen a recovery across sectors, advertising has kicked in for us. So, if you look at the overall picture for TV18, revenues, ex-movies, has grown about 18 percent and that is reasonably good.
If you look at the subscription revenue, that has grown at 16, overall we have grown 17 percent in TV18. EBITDA has grown 42 percent, it shows that finally regional is paying for us, we have been saying this for a long time. We have been able to cut our losses, we have been able to aggressively grow revenues across the board both for entertainment and news and I think that is showing up.
Is this to some extent because of elections, the good performance of advertising revenues and the good performance of regional channels?
Joshi: For news, yes, without a doubt. This quarter, advertising has grown 37 percent and that is definitely on the back of government revenue, on the back of elections. This quarter is definitely a case of elections kicking in for us. But if you look at subscription revenue as well, which is 16 percent and overall we have grown about 28-29 percent for news alone this quarter.
This one says Viacom18 plus India Cast Entertainment has grown by 6 percent, did you suffer a large base?
Vats: There are two ways to look at it. We also operate a movie business which is a project-based business. So on total entertainment, the growth is 6 percent. However, if you were to look at outside of movies because that varies from project to project, last year for a record, we did a very big film called Toilet: Ek Prem Katha in this period and there wasn’t a bit comparable this year. The growth is about 13-14 percent for us, for our entertainment business as well. So I think that is good.
Why do you say 13-14 percent and not 6 percent?
Vats: Because in net, if you were to look at our entertainment portfolio which is more comparable, that number will be in mid-teens, 13-14 percent. I think that is what has happened.
Our ad sales growth is also close to about 14 percent and it has has two components. Our regional portfolio has done very well. Our regional growth is upwards of 40 percent.
Our free-to-air (FTA) portfolio has done very well, which is free-to-air channels where the growth is upwards of 50 percent. Our flagship channel Colors TV runs large impact properties like Big Brother, Big Boss, Fear Factor and India's Got Talent, so depending on which quarter that comes in, so this year the comparative for Colors were a little weak.
Ideally, if we were to look at net of that, we would be delivering ad sales growths in early 20s, which is comparable to what the best in class is and well ahead of the market.
Let me speak a little more about the movies because I liked Andhadhun but I guess that will get counted in this quarter. What can you guide in terms of the second half, are there any big releases, I will come to the television part in a bit but in terms of movies, should investors expect some bigger news?
Vats: There is a good news already in terms of movies. We don’t have a big release like Padmaavat, we don’t have a tent pole like that but there is a slew of lot of good films which are coming.
First of all, we have opened our account in south India as well. We did our first Telugu film called Devdas, which did exceedingly well, which is also coming in this quarter and Andhadhun's – you are absolutely right – second weekend has just got over, and it is higher than the first weekend. In the recent recorded history of Bollywood, this is only the second film which has done that.
The first film was also ours, which was Queen in 2014. So, I think the second weekend doing better than first weekend speaks volumes for content. Kudos to the team, I think they have done a fantastic job.
We have got Baazaar coming up. The number of films which we are doing will keep getting dialled up but we don’t have a tent pole.
Tell us a little more about Voot. How have the downloads been, what is the increase in the number of people who are oversubscribing?
Vats: For Voot also we have got fantastic news. Voot continues to be a strong, number two premium OTT (over-the-top) player in the country. We have just crossed a milestone of 100 million gross downloads, our current monthly active is hovering at around 45 million and our watch time – as I keep telling you all the time – is always the highest, our watch time is about 42 minutes.
Currently, people are crazy about Big Boss 12, which is going on. We are seeing close to about 7-8 million daily views on Big Boss 12. Our fiction is responding very well also. Some of our shows on fiction also are delivering upwards of about two million daily views.
On Voot we have got a huge amount of momentum but as we go forward, we are also looking at a kids’ service which will come in towards the end of this year or early next year. That is a very special service and we will talk about it later.
You spoke about government advertising and I guess it will evolve into party advertising as we get closer to elections, but what about corporates, have you seen a pickup in advertising revenue because I would assume that is the more sustainable piece?
Joshi: Yes, of course. I was talking about regional channels from the context of government advertising, but if you look at our mainstream channels, they have grown about 28 percent this quarter. This is a significant jump and that is largely on the back of corporate and retail advertising.
In regional, while government has really grown, we are also seeding the business for the long term and I see corporate and retail advertising both picking up for all our 14 regional channels. I am very hopeful of that. If you look at our Hindi channel, it has done exceedingly well. If we put together, we have seen 28 percent growth is on the back of corporate advertising. So, there is a clear up tick there.
To come to the investment mode, this time it is the Kannada Cinema that has been launched, last quarter it was Tamil. When do these ventures generating money?
Vats: Firstly the good news, the Colors Kannada Cinema has opened very well. It has open to about 70 GVM (gross viewership in million). It is the number two movie channel in the second week of its launch. It has done exceedingly well.
We follow a philosophy where we want to break even in year three of the launch of a channel and a cumulative break even in year five. However, again, the good news there is that the two of our channels which were launched, MTV Beats and Rishtey Cineplex, have broken even in under two years. Colors Tamil is also, from an advertising and a revenue point of view, tracking very well. We have got to keep dialing up the viewership as we go forward.
This is an impressive number, the EBITDA growth of 42 percent. I do not know how much you can guide because there are a lot of one-offs events as well, no Budget but perhaps elections would bring in some money. Is this a doable quarterly run rate, over Rs 100 crore EBITDA?
Joshi: What I would say is that regional has been able to cut its losses. We have been able to drive revenues aggressively for the regional piece. More importantly the aggressive investments that we have made, in FY16-17, are now seeming to pay off.
If you look at this quarter, we have cut losses by 70 percent. I think that is the heartening news. I think we will be able to grow revenues, without giving any guidance I would say that the worst is behind us as far as regional is concerned and I think that is where the real story is, regional and Hindi.
English, we are doing reasonably well as expected because we have leadership positions. We are number one news broadcaster in the country with a share of 10.7 percent. Over the last two years, it has been a slow and steady rise from number 6 position to number one. If you look at our business portfolio, our share is 70 percent for CNBC-TV18, in market hours we are 77 percent, so we are pretty much the market.
In Hindi we are 62 percent, so, we are again pretty much the market. CNN News18 is now become a strong number 3, doing reasonably well in the last few weeks. Hindi is now number 2 in HSM mega cities. I think, overall we are number 3. If you look at the health of our brands and if you look at the ratings, we are really in a commanding situation and eventually it will lead to revenues.
Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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