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TV18 turns red in Q1 on account of impairment in asset value, severance pay

MUMBAI: TV18 Broadcast—the operator of CNBC-TV18, CNBC-Aawaz, CNN-IBN and IBN-Lokmat, among a number of other channels—turned red on the net level as the new management had planned to clean the P&L sheet, even at the cost of a one-time exceptional adjustments of Rs 223.3 crore (Rs 2.23 billion).

The company said that the adjustments, made by way of exceptional items to the P&L account for the quarter ended 30 June 2014, were based on a review of the current and non-current assets of the company.

“These adjustments reflect the diminution in the value of certain tangible and intangible assets as well as write-offs and provisions for loans and advances and receivables. These adjustments, however, will not impact future operating profits and cash flow of the business of the company and its subsidiaries,” it clarified.

It said that based on a review of the current and non-current assets, the group had accounted for (a) obsolescence/impairment in the value of certain tangible and intangible assets to the extent of Rs 122.27 crore (Rs 1.22 billion) and (b) write-off and provisions of non-recoverable and doubtful loans/advances/receivables to the extent of Rs 87.70 crore (Rs 877 million).

Exceptional items also included Rs 13.31 crore (Rs 133.1 million) towards severance pay and consultancy charges.

TV18, which has businesses spanned across television broadcasting and films production, posted a consolidated net loss (before share in profit of associates and minority interest) of Rs 214.07 crore (Rs 2.14 billion), compared to a net profit of Rs 3.87 crore (Rs 38.69 million) in the corresponding quarter of the previous fiscal.

However, the company noted that the result for first quarter is not comparable with the corresponding previous period as Equator Trading Enterprises Pvt Ltd, including its subsidiaries Panorama Television Pvt Ltd and Prism TV Pvt Ltd, had become wholly owned subsidiary of TV18 with effect from 22 January 2014.

“The consolidated results of the current period include the results of these subsidiary companies. Eenadu Television Pvt Ltd had also become an associate with effect from 22 January 2014,” TV18 clarified.

Meanwhile, TV18’s consolidated revenue for the quarter under review stood at Rs 527.7 crore (Rs 5.28 billion), up 33 per cent from Rs 396.2 crore (Rs 3.96 billion) in the year-ago period.

However, its expenses also grew 32.9 per cent to Rs 509.5 crore (Rs 5.09 billion), from Rs 383.4 crore (Rs 3.83 billion) in the year-ago period.

Programming costs nearly doubled to Rs 165.7 crore (Rs 1.66 billion) in the quarter under review compared to Rs 87 crore (Rs 870 million) spent in the corresponding quarter last fiscal. Employee costs too advanced 49 per cent to Rs 103.9 crore (Rs 1.04 billion), from Rs 69.7 crore (Rs 697 million) in the same period last year.

Interestingly, the company managed to reduce its marketing, distribution and promotional expenses (placement charges) by 27 per cent at Rs 102.2 crore (Rs 1.02 billion).

Other expenses at Rs 108.2 crore (Rs 1.08 billion), up 43.1 per cent, strained the company’s finances.

However, TV18’s operating profit (EBITDA) enhanced to Rs 18.2 crore (Rs 182 million) in Q1FY15 as against the corresponding quarter last fiscal’s Rs 12.8 crore (Rs 128 million), showing a jump of 42.2 per cent year-on-year.

The company said growth in EBITDA was driven by sustained growth in the entertainment operations—led by Colors—and growth in the news operations aided by the recently concluded general elections.

Media operations (TV channels) continued to dominate TV18 financial performance. The segment generated revenues of Rs 513.42 crore (Rs 5.13 billion), more than 97 per cent of its total operating revenues. In the year-ago period, revenues from the segment stood at Rs 383.39 crore (Rs 3.83 billion).

However, segment profit from media operations was down to Rs 19.36 crore (Rs 193.6 million), from Rs 22.23 crore (Rs 222.26 million) in the year-ago period.

Media operations include business news operations—CNBC-TV18, CNBC Awaaz and CNBC-TV18 Prime HD; general news operations—CNN IBN, IBN7, IBN-Lokmat and History TV18 (infotainment channel); entertainment operations—Colors and MTV; English music channel—VH1; English entertainment channel—Comedy Central; kids channels—Nick and Sonic.

Its regional media operations include ETV News which saw the launch of ETV Gujarati bringing the total bouquet strength to nine channels; ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar, ETV Urdu, ETV Kannada, ETV Bangla and ETV Haryana. The channels sustained their strong viewership performance aided by the National General Elections.

The other segment, film production business housed under Viacom18 Motion Pictures, generated revenues of Rs 14.31 crore (Rs 143.1 million). In the year-ago period, revenue from the segment stood at Rs 18.79 crore (Rs 187.9 million).

The loss from film production and distribution business stood at Rs 0.95 crore (Rs 9.54 million), compared to a loss of Rs 8.47 crore (Rs 84.67 million).

Viacom18 Motion Pictures released Hollywood film ‘Transformers: Age of Extinction’, Hindi film ‘Manjunath’, Telugu film ‘Anamika’ and Tamil film ‘Nee Enge En Anbe’ during the quarter.

The company also launched CNBC Bajar, India’s first Gujarati-language business channel, on 1 July 2014.