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Sun TV Q4 net up 11.3% amid tight cost control

MUMBAI: South-based television broadcasting company Sun TV Network’s  net profit grew 11.3 per cent to Rs 197.6 crore (Rs 1.98 billion) in the fiscal fourth quarter amid tight cost control and a revenue performance in line with the market expectation.

Operating revenue for the quarter ended 31 March 2014 grew 10 per cent from the earlier-year to Rs 520.18 crore (Rs 5.20 billion). Steady pick-up in subscription revenue due to digitisation helped the broadcaster to post double-digit growth in the top line. Domestic subscription grew 24.6 per cent, with cable revenue up by 34 per cent and direct-to-home (DTH) by 21 per cent over the earlier year. On a quarter-on-quarter basis, domestic cable revenue declined by 5.6 per cent to Rs 51 crore (Rs 510 million).

Ad revenue grew 4.7 per cent from the year-ago period, indicating that Sun TV Network is getting the industry to accept some amount of its rate hikes. Incidentally, ad revenue growth has come after two quarters of decline over the earlier-year period.

The company saw a 15 per cent surge in operating profit (EBITDA) to Rs 400.03 crore (Rs 4 billion) as cost of revenue and other expenses declined considerably. Employee costs, on the other hand, saw a substantial increase.

In spite of Sun TV cutting the interest outgo at Rs 5.9 million, a 3 per cent increase in depreciation provisioning at Rs 232.48 crore (Rs 2.32 billion) and tax expenses growing 16 per cent to Rs 102.71 crore (Rs 1.03 billion) capped net profit growth.

FY2014 net suffers from IPL franchise

Sun TV Network posted a 5 per cent growth in net profit to Rs 748.01 crore (Rs 7.48 billion) for the year ended March 2014 (FY2014) compared to Rs 709.56 crore (Rs 7.09 billion) in the previous fiscal.

During the period under review, the company received Rs 105.53 crore (Rs 1.05 billion) as income from its IPL franchise Sunrisers Hyderabad. However, this was cancelled out by what it spent towards franchise expenses—Rs 142.06 crore (Rs 1.42 billion).

Net sales grew 15.4 per cent to Rs 2096 crore (Rs 20.96 billion) on the back of IPL revenue and a 26 per cent growth in domestic subscription income.

Ad revenue growth was at 1.6 per cent year on year, impacted by the Telecom Regulatory Authority of India’s (TRAI) 12-minute ad cap regulation.

Revenue from FM radio operations stood at Rs 130 crore (Rs 1.3 billion), up 20.7 per cent from the year-ago period. EBITDA rose 44.7 per cent to Rs 46.7 crore (Rs 467 million). Net profit was Rs 31.4 crore (Rs 314 million), up 19.4 per cent.

Meanwhile, the network’s board of directors recommended a final dividend of Rs 2.25 per share (45 per cent). This was in addition to the interim dividend of Rs 2.25 per share (45 per cent), Rs 2.50 per share (50 per cent) and Rs 2.50 per share (50 per cent) declared on the previous three meetings.

Sun TV Network’s fourth quarter performance was in line with market expectations. As such, the counter witnessed increased investor interest, helping the stock price to record steady gains in the past few trading sessions. In the result week, Sun TV’s share price had surged nearly 10 per cent to current level of Rs 424.40 on the BSE.