TV18 Broadcast, part of the Network18 group, on Tuesday reported a 40 percent year-on-year (YoY) jump in its consolidated net profit at Rs 205.16 crore for the third quarter ended December 31, 2019.
In the corresponding quarter last year, the company posted a net profit of Rs 146.96 crore. Consolidated operating Ebitda (Earnings before interest, taxes, depreciation, and amortisation) stood at Rs 268 crore for the quarter under consideration, as against Rs 88 crore a year ago. Consolidated revenue from operations of the company stood at Rs 1,474 crore for the quarter under consideration, as against Rs 1,524 crore a year ago, TV18 Broadcast said in a regulatory filing.
Managing Director of TV18 and Network18 Rahul Joshi and Viacom18 Managing Director Sudhanshu Vats speak about the financial performance of the company and the future outlook.
Since this is a trebling in Network18, let me start with you Sudhanshu, what went so right? Vats: From a profitability point of view, last time also when we spoke I was telling you, one thing we are doing in a tough year like this is driving profitability very hard. I think there are three components that have driven that profitability, and as you will see, the entertainment profitability has gone up considerably in this quarter. It is at Rs 245 crore so it is a big jump. But more importantly, our year-to-date (YTD) profitability has almost doubled in absolute numbers and more importantly in percentage terms as well. So that is a very good story.
The three things that have contributed to that piece is, one, we have had a very strong eye on the costs. Being a tough year, we are looking at every line, every possible item, I think that is one thing which is contributing. The second is, our subscription income continues to remain buoyant and I think that is good news despite advertising being very tepid or is being tough in a year like this. Finally, the other thing which we have started which is what you have seen in this quarter and you will continue to see it as we go forward, is we are also now monetising our content through partnerships. I think with different streams opening up, with different options for monetisation of content, both library and more recent, but definitely more library content, we are now available on many more platforms than what we were earlier. So, I think that is helping; those are the three key pillars which have led to this performance.
Rahul, advertising revenues, at the outset Sudhanshu said that it has not been a good year. Joshi: Yes, I think if you look at the news vertical, we had an outstanding first quarter thanks to the elections. I had made this point even to you last time, the last two quarters have been challenging, Q2 and Q3, I think they have remained largely flat or marginally down. As a result, if you look at YTD, three quarters for news, we are up 7 percent which is not a bad showing given the challenging environment, but it is largely because we had a great first quarter. The quarter gone by has been challenging, business is tough, you know more about the economy than I do. No green shoots? Joshi: Green shoots, I am optimistic, I have been an incurable optimist, and I do think that sentiment is turning. I am looking forward to a much better fourth quarter. News - it is good for news in any case and I think that the sentiment is turning around a little bit. Cost optimization clearly is visible. Anything more that you want to add, clearly employee cost, other non-employee cost, everything has been going down? Joshi: I think we have been able to control costs quite aggressively, both on the entertainment and news side. The other thing that has happened is, we have looked at new sources of revenue, and we have started a campaigns vertical within the new business which is doing larger campaigns which are far bigger in monetisation terms. You mean like Mission Paani? Joshi: We have done Mission Paani, we have a very successful campaign with Reckitt Benckiser. So, Reckitt Benckiser has been a great partner on that. During the time of elections, we did ‘Button Dabao, Desh Banao’ and that has also been a very successful campaign. So, we have opened up new revenue streams. I think digital has done well for us.
So, if you look at the fundamental health of the business, it is intact, it is doing very well. We are the number one news broadcaster in the country. We slipped to number 2 for a very brief period in between post new tariff order (NTO), but we have bounced back. I think all our brands are doing exceptionally well. So, on that side, I am not worried.
On the digital side, if you see some of the experiments that we have done, like Moneycontrol Pro subscription service, we have 1,20,000 paid retail subscribers as of date, I think this is the biggest thing that has happened for us from a news point of view. Our competitors are sub 10,000-15,000; that is the best that they are looking at.
Are you looking at any further monetisation of the digital content Sudhanshu? Vats: Just building on what Rahul just said, I think even our entertainment business, the health is really good. As a matter of fact, I must say 2020 we have started on a very strong footing. Colors is back as number 1, strong number 1. So, that is our lead channel. More importantly, Voot is now inching towards a 100 million monthly active users. How much are you able to monetise? Vats: We are monetising it quite well. Our ad sales growth is robust in digital business and overall digital business is doubled over last year. So, I think the mantra on digital business from a revenue and business point of view is double every year, I think that is the bare minimum we should do and this year we will actually be doubling that. So, that is really good news.
We have also gone with the first subscription product Voot Kids; very early days but received very well in the market. So, on digital motoring and overall health of the business, I am taking Rahul’s words, it is looking really good. I think we are on a good footing.
Anything interesting on films that we should look forward to? Vats: You could have waited a little longer - Forest Gump remake is coming by end of the year. It is called Lal Singh Chaddha. Aamir Khan in and as Lal Singh Chaddha, should be a big movie. Fourth quarter, you should get in the fourth quarter. Vats: Yes, fourth-quarter calendar year. I wanted to ask you about regional channels - is there any more colour you can add literally? Joshi: The story really for us has been Hindi and regional in the last few quarters. English is clearly under strain, I said this to you even last time. It is a mature category for us. During a slowdown which is cyclical in nature, it impacts English more than any other but Hindi has kept pace so the growth that we see is largely on Hindi and I think regional is coming up very well. I think the regional government business is doing very well so that is a vertical that is really firing for us.
Central government advertising has been hit, but it is more than made up by regional government advertising so that is the piece we are looking for. Also again if you look at the fundamental health in terms of ratings and rankings, we have improved over the last years. So we are in the top three in most of our channels, in some we have number four or five where we are hoping to get into the top three.
What is the consolidation story that keeps appearing in newspapers? Joshi: We have made our position very clear on that. We have categorically denied any such story in news. The group remains absolutely committed. We plan to grow the business, as you have seen we have made so much investment over the last few years on digital, on television, so there is no question on getting out of it. We have firmly, strongly denied, it was a mischievous story so that is absolutely wrong. Anything, further investments or anything you want to add in terms of monetisation of digital products, what is the next big thing that we should wait for? Vats: The digital journey will continue, I think you can expect to see our premium offering on Voot which is behind paywall where we will have features on originals, we will have international content, you will get to see some really good international content as well and hopefully ahead of TV in terms of content so that is something which is coming it is a paid product. So it is in beta as we speak. Disclaimer: Network18 and TV18, the companies that operate CNBCTV18.com, are controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.