Dish TV management on Q4 results, NTO implementation, Free Dish impact, and OTT platform Watcho

MUMBAI: Direct to home (DTH) operator Dish TV has posted a consolidated net loss of Rs 1361.3 crore during the quarter ended 31st March as against a net profit of Rs Rs 152.7 crore in the trailing quarter ended 31st December.

During the year ended 31st March 2019, the management has carried out impairment assessment of certain recoverable amounts and carrying value of its intangibles, including goodwill. Exceptional items for the year ended 31st March 2019 in standalone financial results include:
1. Impairment of goodwill: Rs. 1543 crore
2. Impairment of loans/advances to Dish TV Lanka (a subsidiary): Rs. 141.99 crore
3. Impairment of certain other recoverable amounts: Rs. 19.55 crore

The company’s EBITDA fell to Rs 415 crore compared to Rs 517.6 crore a quarter ago. The EBITDA margin was at 29.7% as against 34.1% in Q3.

Operating revenue was down to Rs 1398.7 crore compared to Rs 1517.4 crore. Expenditure decreased to Rs 983.8 crore compared to Rs 999.9 crore.

The company’s subscription revenue declined 5% to Rs 1308.3 crore as against Rs 1412.6 crore. Ad revenue declined to Rs 24.1 crore from Rs 30 crore.

Dish TV added 47,000 net subscribers during the quarter as compared to 142,000 in the trailing quarter. The company closed the fiscal with 23.7 million net subscribers.

Dish TV’s fourth quarter revenues were impacted due to the transition to the New Regulatory Regime. Revenues were down Y-o-Y notwithstanding a sharp turnaround in the third month of the quarter. Dish TV CMD Jawahar Goel said, “The migration has given significant data insight to the TRAI and the price regime remains under consideration. We believe the TRAI may undertake the exercise of price rationalisation which should result in higher consumption of channels going forward.”

On 22nd March 2018, Videocon D2h had merged with and into Dish TV India with the appointed date of the merger being 1st October 2017 ended 31st March 2018 thus represent 12 months financial performance of Dish TV India and 6 months financial performance of Videocon d2h.

The company noted that the financial numbers for fiscal 2019 are thus, not comparable with the corresponding period last year.

However, presuming that the financials for fiscal 2018 had represented 12 months each of Dish TV India and Videocon d2h, the Adjusted EBITDA would have been Rs. 1969 crore with an Adjusted EBITDA margin of 31.6%.

For the full fiscal, the company’s net loss zoomed to Rs 1136.4 crore from Rs 84.9 crore. The EBITDA jumped 55.3% to Rs 2044.3 crore from Rs 1316 crore.

Operating revenue jumped 33.1% to Rs 6166.1 crore while subscription revenue rose 34.3% to Rs 5663.8 crore. Ad revenue jumped 66% to Rs 111.3 crore. Expenditure rose 24.2% to Rs 4141.8 crore from Rs 3318.1 crore.

New regulatory regime

The fourth quarter of fiscal 2019 witnessed pay-tv distribution platforms continuing the drive to migrate subscribers to the New Tariff Regime. However, with the Tariff Order deadline shifting from 28th December to 31st January 2019, pay-tv subscribers remained skeptical about channel selection.

An early believer of the Tariff Order, Dish TV India said it was the first in the industry to partially and voluntarily roll-out the provisions of the Tariff Order by offering a-la-carte channels to its subscribers at affordable prices.

The company also stated that post notification of the order it leveraged its deep insight about the recharge history of its subscriber base and offered ‘Best Fit Packs’ to facilitate channel selection by its subscribers in addition to ala-carte offerings.

Dish TV also stated that it worked in overdrive to satisfactorily migrate its 23.7 million subscribers to channels/packages of their choice or to ‘Best Fit Packs’ even though subscribers remained undecided.

It further stated that January and February saw huge inquiries and call surge at call centres. This rush of customers, shifting implementation deadline and technological challenges weighed heavy on recharges and acquisitions during the first two months of the quarter with subscribers deferring recharges for weeks at a stretch.

The company noted that in March its internal surveys started throwing encouraging results with 93% of the migrated subscribers giving a thumbs up to the new channel combinations offered to them.
Close to 60% subscribers, on an average, were upgraded from their existing monthly packs with the average full month recharge being higher by Rs. 8 and Rs. 7.25 respectively for Dish TV and D2h platforms. In fact, the last month of the quarter turned out to be a blockbuster with acquisitions being higher by 156%, and revenues higher by 18% over January and February average.

Business outlook for FY20

The company stated that the turnaround in business performance in March set the ground for even stronger growth in the year ahead.

Dish TV India Group CEO Anil Dua said that FY20 started on a strong note with the general elections keeping viewers hooked on to their television. He further stated that the soon to start Cricket World Cup should further engage the television viewing masses bringing revenue growth to the business.

“The year is also going to be the first full year seeing the positive impact of the now well in place Tariff Order. We strongly believe that the New Regulatory Regime will bring the much-needed transparency in the industry thus helping distribution platforms like Dish TV command a premium for its nationwide reach,” he said.

Dua also exuded confidence that FY20 would be a landmark year for Dish TV with market-leading revenue and EBITDA growth. “The New Regulatory Regime along with continuing synergies should further help us increase our EBITDA per subscriber during the year,” he added.

Free Dish impact

With a strong semi-urban and rural base, Dish TV India said it stands to benefit from the planned withdrawal of Hindi entertainment and movie channels by the top four broadcasters from the DD Free Dish platform.

The company has been strategically targeting Free Dish subscribers with attractive recharge schemes and bundled acquisition offers. Considering the extensive cricketing line-up during the fourth quarter, Dish TV India launched recharge offers that offered free-to-air movie and entertainment channels that were erstwhile available on DD Free Dish along with channels that showcase the entire Indian cricketing action.

Talking about the Free Dish impact, Goel said, “The decision of the big four broadcasters to withdraw free-to-air channels from the DD Free Dish platform has provided us an immense opportunity to win back our customer base in markets that were consuming private channels on the government platform. Dish TV India has positioned itself in a way that it becomes the obvious choice of entertainment for these subscribers. We also remain optimistic about broadcasters putting up a pay-wall around linear channels being offered by them on alternative distribution platforms.”

One year of the merger

Dish TV India completed one year of Videocon d2h’s merger with Dish TV in the fourth quarter fiscal 2019. The company grew in size during the year increasing its subscriber base by 700,000 subscribers. Merger synergies realised from almost every operating expense line item led the EBITDA margin to expand to 33.2% at the end of fiscal 2019.

New HD set-top-boxes that are more economical yet offer better features than the outgoing ones were launched during the year. Synergies realized in capital expenditure were to the tune of Rs.1,000 million.

Dish TV India further strengthened its service network post-merger. The Company now has 385 company-owned service centres, up from 282 and around 4,073 company technicians. The integrated yet differentiated User Interface helped achieve greater efficiencies in the areas of field service and customer satisfaction during the year.

Capability Maturity Model Integration (CMMI), Level 5, was awarded to Dish TV India during the year making it the only media and entertainment organisation in the world to be certified with ‘Maturity Level 5.’ Organisations at ‘Maturity Level 5’ demonstrate capability to accomplish and sustain their business objectives and performance.

Integration of headend infrastructure was planned to enhance the customer TV viewing experience and serve satellite operations for both its brands. During the year, Dish TV India upgraded and expanded its entire DTH platform to the AVP 4000 video processing platform. The award-winning compression technology enabled the Company to adapt to both traditional broadcast and multiscreen service delivery from a single platform.

The Year Ahead

With election-related uncertainty getting over and a stable government back at the Centre, economic development should be the top priority, Dish TV said. The of-late, slight slowdown in the economy, due to sluggish agricultural growth and subdued private consumption should now give way to a high growth environment, it added.

The television industry had its fair share of ups and downs in fiscal 2019 due to regulatory and perception driven challenges. Fiscal 2020 should, however, be a year of immense growth due to extensive cricketing action as well as the positive impact of the general elections.

In addition, increasing TV households, urbanisation, growing multi-TV households, rural electrification and improving consumer sentiment should continue to be primary drivers of DTH growth.

Dish TV India is confident of further strengthening its pole position in the Indian DTH industry while increasing its profitability. The New Regulatory Regime should aid margin expansion with content costs becoming a pass-through item.

Speaking about the widespread change that The New Regulatory Framework has brought in the industry, Goel, said, “While the DTH industry has been working hard to implement The New Regime, we also appreciate the rapid evolution that the cable MSO’s have gone through post the roll-out of the New Regulatory Regime. Business practices like packaging, billing, dunning and prepaid offers have been well implemented by corporate MSO’s. Although smaller MSO’s have some catching up to do, the positive spirit with which the New Regime has been embraced is appreciable.”

OTT platform Watcho crosses 100,000 downloads

During the quarter, the company is excited about the future of Watcho, the in-house OTT app Watcho. The app is available to download and view on the Web, App Store and Play Store and has already crossed a hundred thousand downloads since its launch a few days back. The platform has over 20 original shows in Hindi and regional languages.

Talking about the concept behind Watcho, Dua said, “Watcho is not going to be yet another OTT app adding to the crowd of existing applications in the market. Our foray into content is a well-thought initiative where the fundamental concept is to build an emotional connect with our 23.7 million strong and growing subscriber base. Our OTT offering would come with a fair mix of original content, linear channels, and catch-up content.

He, however, added that the company is not in the race to acquire popular content at exuberant price points but would rather want its viewers to come on board and share their talent with the world through the app. “This, we believe, would ensure viewing stickiness on our platform. Content beyond user-generated would generally below budget, short-format programming that would be procured on a revenue share basis.”

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