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Pay channel charges, interest burden chew Sea TVs bottom line

MUMBAI: Agra-based multi-system operator (MSO) Sea TV Network has slipped into losses due to higher pay channel charges in the fiscal third-quarter.

The company reported a net loss of Rs 1.78 crore (Rs 17.8 million) in the three-month period ended 31 December 2013 on an operating revenue of Rs 3.98 crore (Rs 39.8 million). In the preceding quarter, it had posted a net profit of Rs 82.3 lakh (Rs 8.23 million) on an operating revenue of Rs 4.88 crore (Rs 48.8 million).

It has been a double whammy for Sea TV in the third-quarter. Not only did its operating revenue show a decline of 18.4 per cent, but it also incurred operating losses of Rs 34.69 lakh (Rs 3.47 million). In the trailing quarter, it had returned positive operating profit of Rs 82.33 lakh (Rs 8.23 million).

Payout on account of pay channel charges grew six per cent to Rs 1.64 crore (Rs 16.4 million) on a quarter-on-quarter (q-o-q) basis while its composition in total operating expenditure enhanced to 41.4 per cent as against the previous quarter’s 31.9 per cent.

Owing to higher outgo in terms of pay channel charges, total operating expenses also edged up 4.5 per cent to Rs 4.51 crore (Rs 45.1 million).

Apart from higher pay channel charges, increased interest burden in the fiscal third-quarter left a huge dent on the company’s bottom line. Interest outgo nearly doubled to Rs 1.27 crore (Rs 12.7 million) in the third quarter compared to Rs 67.41 lakh (Rs 6.74 million) in the prior three months.

Pay channel has been the major culprit that pulled down the company’s performance in this fiscal.

Delay in the implementation of digital headend and conditional access system (CAS) dealt a severe blow to its finance. It saw an additional cost of Rs 9 crore (Rs 90 million), which was partially financed through loans and internal accruals, over and above earlier estimates of Rs 59.65 crore (Rs 596.5 million). Sea TV raised Rs 50.20 crore (Rs 502.0 million) through an initial public offering (IPO) and has so far utilised Rs 50.14 crore (Rs 501.4 million).

Sea TV has till now spent Rs 32.66 crore (Rs 326.6 million) towards converting the analogue system of distribution to digital addressable system (DAS). It incurred expenses of Rs 15.55 crore (Rs 155.5 million) towards setting up its own cable distribution (underground optical fibre) network capable of digital transmission throughout the city of Agra and adjoining areas.