Sun TV Network to deploy Rs 500-550 cr capex in FY20: SL Narayanan

  •  
  •  
  •  
  •  

MUMBAI: Media conglomerate Sun TV Network plans to deploy Rs 500 to 550 crore capex in FY20, Sun TV Network Group CFO S L Narayanan has told analysts during earnings conference call to discuss the Q4 and FY19 results.

The capex includes Rs 300 crore for movie rights acquisition, Rs 100 crore on movie production, Rs 35 crore on Sun Bangla, and Rs 100 crore for normal fixed asset addition.

“What we indicated was the movie production would be around Rs 100 crore. Sun Bangla is around Rs 35 crore. Our spend on satellite rights acquisition could be around Rs 300+ crore. And normal fixed asset addition anything will be Rs 50-75 crore or max Rs 100 crore,” Narayanan said.

The company’s management indicated that the launch of Sun Marathi might get delayed. The channel was expected to launch by end of the calendar year 2019.

“On Sun Marathi, we’ve not taken the final call on the launch date. But there is some work happening, but it has not gone into a complete activity,” Narayanan stated.

Sun TV Network president & MD R Mahesh Kumar said that the investment in Sun Marathi is approximately Rs 50-60 crore.

The company has big plans for its over the top (OTT) platform Sun NXT, which has crossed 1 million paid subscribers and is earning an estimated Rs 60 crore per year.

Having concluded deal with Vodafone Idea, the company is in the process of finalising a content deal with Reliance Jio. Recently, Sun NXT also partnered with direct to home (DTH) operator Tata Sky for its Tata Sky Binge service. Sun NXT is also being expanded through recruitment of new talent.

Narayanan stated that the company is exploring wider content deals with telcos wherein its content will be available as catch-up TV as well as on live stream by making Sun NXT as part of the telco’s OTT app.

This will be advantageous for the telcos as it will drive greater data consumption and also make their product that much richer, he noted.

Kumar added that the company is also negotiating a deal with MX Player. Sun NXT also has deals with Hathway Cable and Datacom and ACT Fibernet wherein it pays a fixed sum on per subscriber basis.

“So I think you will see a big jump in the overall digital revenue once 90-95% deal flows that have happened,” he stated.

Kumar also revealed that the company’s Indian Premier League (IPL) franchise Sunrisers Hyderabad will earn profit before tax (PBT) of Rs 170 crore from the recently concluded season. “We will make something around Rs 170 crore this year,” he said in response to a question. He also stated that in the previous season, the company’s PBT from the IPL franchise was Rs 199 crore.

Sun TV Network CFO VC Unnikrishnan said that the company’s revenue break-up in Q4 FY19 was Rs 340 crore (ad), Rs 13 crore (broadcast), Rs 42 crore (international subscription), Rs 126 crore (pay channel), Rs 194 crore (DTH), Rs 115 crore (movie), and Rs 58 crore (IPL).

Asked about the impact of the new tariff order (NTO), Kumar said that the impact in the four Southern markets is close to 10% initially. “I think the drop in reach was quite high, around 12% to 15%. But I think we are actually catching up. I think now it’s stabilising at around 8%, 10% of GAAP, pre-NTO and the current scenario,” he stated.

The disruption due to NTO resulted in advertisers pulling back ad spends. “The advertisers were very, very cautious, and they took a very conservative approach in terms of actually spending money, so I think the impact of it has felt across all the 3 months,” Kumar said.

Sun TV has been impacted due to the fall in reach due to NTO and BARC India’s decision to stop reporting viewership data for analogue homes has impact Sun TV as 38% of TV homes in Tamil Nadu as still analogue.

That said, the company is confidence that the channel will be back on track by July-August due to new show launches.

“And we’re also pushing hard to basically improve our reach numbers with tying up with cable operators and the DTH operators. So the combination of these 2, I think we should be in a relative sense, we should bounce back to normal,” Kumar said.

Kumar also stated that the Tamil Nadu distribution market is seeing a customer churn from Arasu Cable to DTH platforms like Sun Direct, Tata Sky, and Airtel Digital TV post the implementation of NTO.

Arasu consumers who were earlier paying Rs 70 per month now have to shell out Rs 200+ under the new regime. This is causing customers to migrate to private cable TV and DTH platforms.

Kumar expects Arasu to get further marginalised in the next 2 to 3 quarters if the trend continues.

Sun Direct, which used to do 100,000 to 200,000 STB seeding a month, is doing 0.5 million. The DTH operator is planning to do 2 million STBs overall across four Southern markets, Kumar added.

“And to just to give you the thing last year, totally, we did 2 million for 12 months. This year, we are planning to do 5 million or 6 million,” he stated.

The company has tied up with leading producers to launch big ticket shows.” We are working with some of the top-notch producers in the industry, at least 3 to 4 guys are setup based in South, and they are launching some big ticket shows. So I think next 2, 3 months, we are very confident that there will be traction happening in the AP, Kannada and also Malayalam,” he said.


  •  
  •  
  •  
  •