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NDTV eyes turnaround of news biz

MUMBAI: Dr Prannoy and Radhika Roy-promoted news broadcaster NDTV Ltd is eyeing break-even of its news business.

While efforts are on to up the ratings of the flagship English news channel NDTV 24×7, there is less  hand-wringing over its future. The channel has been profitable on net level for the past five years, with an average annual profit of Rs 40 crore (Rs 400 million). Though it is not the most watched channel in the genre, NDTV 24×7 has been a destination for advertisers who want to target upscale audiences.

NDTV 24x7Hindi news channel NDTV India, which was loss-making, has turned around. In the fiscal ending 31 March 2014, it has clocked ‘record-breaking revenues’ and achieved EBITDA breakeven.

The black sheep in the bouquet, however, has been NDTV Profit, the 24-hour English business news channel. It has been making average annual losses of Rs 40 crore (Rs 400 million) for the last three years. Facing tough competition from CNBC TV18 and ET Now, the challenge is to make it profitable even without managing to upset the ratings hierarchy.

NDTV has come out with a revamp strategy, outlining a hybrid dual-channel model for NDTV Profit. While during market hours viewers get to see NDTV Profit, the transformation takes place in the non-market hours when it changes into an infotainment channel called NDTV Prime.

It is too early to conclude on the profitability of a new existence that is not even two months old. But early indications are that it is delivering on the revenue front. NDTV said the revenues of the dual channel with pre-sponsored bands are up 140 per cent in April.

Mobile handset manufacturer Micromax is the channel partner for NDTV Prime for three years. Long-term advertising deals have also been signed with multiple advertisers for sponsoring different time bands on the channel.

Vikram-Chandra“NDTV Profit, which was the loss leader for the group, with NDTV Prime in non-market hours and weekend, will turn profitable in one year,” NDTV Group CEO Vikram Chandra had told TelevisionPost in an earlier interaction.

In the fiscal just concluded, NDTV incurred significant incubation costs for NDTV Prime. It also invested in its loss-making verticals and new growth businesses. Net loss, thus, widened to Rs 53.56 crore (Rs 535.6 million) in FY14, from Rs 20.34 crore (Rs 203.4 million) a year ago.

What could be more worrying is that revenue dropped to Rs 349.77 crore (Rs 3497.7 million) in an election year, compared to Rs 390.88 crore (Rs 3.91 billion) in FY13.

The first quarter of this fiscal could, however, lead to higher revenues due to coverage of the general election and the final results on 16 May. Encouraging also is the fact that total expenses fell to Rs 396.73 crore (Rs 3.97 billion) from Rs 406.89 crore (Rs 4.07 billion) in the prior year.

In the exit quarter of the fiscal, NDTV posted a net loss of Rs 16.48 crore (Rs 164.8 million) compared to a net profit of Rs 15.33 crore (Rs 153.3 million). Revenue in the quarter slumped almost 33 per cent to Rs 90.22 crore (Rs 902.2 million),  from Rs 134.21 crore (Rs 1.34 billion) a year ago.

NDTV kept tabs on its expenses. In Q4, total expenses stood at Rs 104.29 crore (Rs 1.04 billion), compared to Rs 119.93 crore (Rs 1.2 billion) a year ago.

NDTV explores raising capital in NDTV Convergence via private placement

NDTV IndiaOn a consolidated level, NDTV is working on several fronts. The company is exploring options to raise capital in NDTV Covergence and other subsidiaries through private placement. Restructuring of these outfits is also being weighed.

On 7 February 2014, NDTV board had given in-principle approval to the merger of NDTV Labs Ltd with NDTV Convergence Ltd. The scheme of arrangement for the proposed merger is being finalised and the process will be initiated after getting regulatory approvals.

NDTV Convergence is showing strong growth. After registering a CAGR of 54 per cent over the last six years, NDTV Convergence expects to touch a revenue of Rs 100 crore (Rs 1 billion) in the coming year.

NDTV is in talks for a private placement ‘at attractive valuation’ in www.indianroots.com—the e-retailing venture of the company, where it said revenues are up by 40 per cent on a quarter-on-quarter (Q-o-Q) basis. According to NDTV, the incubation cost of Rs 25 crore (Rs 250 million) has been well spent on the venture.

NDTV PrimeNDTV also disclosed that in September 2013, two subsidiaries of the company sold 13,769 equity shares of NDTV Ethnic Retail Ltd to an investor for a consideration of Rs 10 crore (Rs 100 million), which resulted in a gain of Rs 9.99 crore (Rs 99.86 million). However, the aforesaid consideration has not been realised as envisaged in the agreement with the investor.

“Subsequent to the year end, following the investor’s inability to pay the agreed consideration, the two subsidiaries have initiated steps to settle the transaction and have made a provision for the unrealised consideration of Rs 10 crore (Rs 100 million) in their respective books of account,” the company stated.

NDTV Lifestyle Holdings is comfortably placed and has a cash balance of more than Rs 110 crore (Rs 1.1 billion). NDTV Worldwide, the consultancy arm of the group, has been profitable for the past four years.

NDTV’s consolidated performance

NDTV’s consolidated net loss for the full fiscal stood of Rs 81.18 crore (Rs 811.8 million) compared to a net profit of Rs 1.91 crore (Rs 19.1 million) in FY13.

Revenue for the fiscal was down to Rs 460.1 crore (Rs 4.60 billion), from Rs 526.81 crore (Rs 5.27 billion) a year ago.

In the fiscal fourth quarter, NDTV posted a consolidated net loss of Rs 31.39 crore (Rs 313.9 million) compared to a net profit of Rs 27.81 crore (Rs 278.1 million) in Q4FY13.

Revenue during the quarter saw a 33.5 per cent decline to Rs 124.09 crore (Rs 1.24 billion), compared to Rs 186.56 crore (Rs 1.87 billion) a year ago.

NDTV said that the postponement of the University Cricket Championship, which had contributed Rs 33 crore (Rs 330 million) in Q4FY13, impacted the revenues this year. It also said that the Q4 numbers include one-time write-offs amounting to Rs 14 crore (Rs 140 million).

Expenses during the quarter were at Rs 159 crore (Rs 1.59 billion), down from Rs 160.9 crore (Rs 1.61 billion).

NDTV board approves reduction of capital

NDTV said that its Board had approved the process of reduction of capital by way of setting off the losses accumulated up to 30 September 2012 amounting to Rs 155.73 crore (Rs 1.56 billion), against the balance in securities premium account as on 30 September 2012.

NDTV has received the requisite approvals from the bourses and the shareholders have also accorded their consent to the reduction of capital.

Pending regulatory and other approvals, no effect has been given to the process of reduction of capital, which, when implemented, will have the effect of reducing the accumulated negative balance in the profit and loss statement as on 30 September 2012 to nil and the balance in the securities premium account by Rs 155.73 crore.