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Political ads fatten news broadcasters’ coffers in FY15
MUMBAI: Television news broadcasters raked in higher revenues and widened their operating profits in the fiscal ended 31 March 2015 while expressing worry over carriage fees.
For news channels, most of the incremental revenues came in from the election spend. But the deadline for Phases III and IV of digitisation was extended, impacting carriage payouts to cable TV networks.
TVP brings to you an analysis of the financials of the four news broadcasters, viz. TV Today Network (TV Today), NDTV Ltd, Zee Media Network Ltd (ZMCL) and TV18 Broadcast (TV18), to spot the common trends during the fiscal.
Note: The comparisons are not strictly on an apple-to-apple basis as different companies have different number of channels and different operating styles. All figures are based on data disclosed by the companies in their respective financial results.
Fattening of purse
Even if everyone is waiting for the ‘acche din’ promised by Narendra Modi prior to the general elections, the news broadcasters seized the opportunity to make hay when the political parties were spending oodles of cash to promote themselves.
The four listed news broadcasters saw a surge in total revenue ranging from 17 to 26 per cent.
Clearly, the companies have seen an improvement in their operating efficiencies.
Media pundits peg the election spends during the fiscal to the tune of Rs 70 crore (Rs 700 million) in the English news genre, and Rs 170–180 crore (Rs 1.70–1.80 billion) for Hindi news channels.
However, only a few channels are part of the listed entities.
The estimated ad pie of the English news genre was Rs 500 crore (Rs 5 billion) in the fiscal, while Hindi, being more fragmented, was close to Rs 1,000–Rs 1200 crore (Rs 10–12 billion).
Overall expenses for NDTV and TV18 remained within the normal range for the fiscal. While NDTV, which is on a course correction mode, saw a 5.8 per cent rise in the expenses, TV18’s total expenses jumped 10.8 per cent.
Zee Media, which witnessed a 17.1 per cent increase, acquired the remaining stake in Maurya TV during the fiscal to make it its wholly owned business. In the earlier fiscal, only a part of the channel was owned by the company.
TV Today, on the other hand, saw a 23 per cent jump in overall expenses as it spent more on hiring bigger names and put a thrust on distribution of its English news channel Headlines Today.
Carriage/ marketing and promotional expenses
One of the major warning signals for the news broadcasters was that after witnessing reduction in their carriage fee for two years, FY15 once again reversed the same as the government pushed the deadlines for Phases III and IV of digitisation.
“Carriage fee has increased for most of the news channels, or remained constant for the strong players, reversing their expectation. The delay in digitisation is going to cost them dearly as there is also a pressure on reducing ad inventory,” commented a media observer.
NDTV once again managed to control the increase in carriage/marketing cost under four per cent, but for a three-channel network, the amount was still very high at Rs 81.6 crore (Rs 816 million) for FY15.
TV Today saw an increase of 18.7 per cent as it focussed on strengthening the English news channel, even as its flagship channel, Aaj Tak, maintained the lead.
*ZMCL’s marketing, distribution and promotion expenses also included those of print publication DNA.
TV18, meanwhile, saw over 80 per cent jump as it also launched CNBC Bazaar during the fiscal.
Analysts say that while the carriage increased, two companies, ZMCL and TV18, also have disproportionately high subscription revenue allotment respectively from Taj Television and IndiaCast.
“This trend is going to define the news genre in times to come. If carriage revenue continues to rise and channels continue to depend on advertising revenues, the quality of content will go down,” said a senior executive of a news channel.
NDTV and TV18 saw a minor increase of 1.9 per cent and 6.8 per cent in their respective employee costs for the fiscal, whereas TV Today, which hired big names like Karan Thapar and Rajdeep Sardesai during the fiscal, saw a 26 per cent jump in employee expenses.
Besides, TV Today had roped in Shekhar Gupta for three months, before he decided to step down.
All the broadcasters saw a significant jump in their production cost, implying that they were investing more in the content.
While TV Today’s production cost saw a 25.2 per cent increase, ZMCL witnessed 58 per cent (some amount towards DNA and Maurya TV). Even NDTV’s production cost saw a 42 per cent increase.
TV18 has not disclosed the figures for production cost separately.
As mentioned earlier, all the four broadcasters improved their operating profitability in the fiscal. While NDTV turned black from an operating loss of Rs 10.1 crore (Rs 101 million) in the previous fiscal, TV Today and TV18 saw 22 per cent and 34 per cent jump in their respective operating profits.
ZMCL’s TV business, meanwhile, saw a massive jump in its operating profit.
Net profit/ loss
While all four listed TV news broadcasters were profitable at the operating level, only TV Today saw growth at the net profit level.
TV Today posted a 32 per cent increase in its net profit compared to the previous fiscal, while TV18’s net profit fell by 75 per cent.
ZMCL, however, posted a net loss of Rs 46.7 crore (Rs 467 million) vis-a-vis a net profit of Rs 18.9 crore (Rs 189 million) in the previous fiscal.