Sun TV Network’s Sun Nxt garnering Rs 50 cr rev from 1 mn subs

MUMBAI: South Indian broadcaster Sun TV Network’s video on demand (VoD) platform Sun Nxt has generated revenue of Rs 50 crore from 1 million paid subscribers.

During a discussion with analysts in Q3 earnings conference call, the company’s management said that Sun Nxt crossed 1 million subscriber mark in Q3 and is adding 20-22,000 subscribers per day.

The company also has significant plans for ramping up the original content on Sun Nxt. In order to grow the digital business, the company is setting up a new team and building scale for ramping up Sun Nxt.

Sun TV Network is in final stages of deal with Reliance Jio for having Sun Nxt content on Jio TV.

The management also stated that the ad revenue will grow in double-digits in FY20 on the back of viewership growth in Kannada and Telugu genres, improvement in Sun TV’s share led by new launches, and revenue contribution from the newly launched Sun Bangla channel.

Sun TV Network’s Marathi GEC is expected to launch by end of the calendar year 2019.

The company also expects a 20-25% growth in subscription revenue in FY20. The management stated that cable TV digitisation in Tamil Nadu is expected to get completed by June.

The company believes that the change in mix toward subscription revenue will have some favorable impact on margins, but higher investments in content would act as an offsetting force. It also expects the profit margins to contract by a few percentage points in FY20.

The management noted that there have been disturbances on the ground due to the implementation of the Telecom Regulatory Authority of India’s (TRAI) tariff order. This, it stated, could lead to an impact on viewership share.

On a like to like basis, the traditional content cost is expected to be higher by 15% excluding Sun Bangla.

The management expects Sun Bangla to breakeven by end of the second year from its launch with a market share of 10-15%. It expects the channel to garner 10% share of GRP in the Bangla genre quickly.

By end of year 2, management plans to have 10.5 hours of original programming per day. Sun Bangla was launched on 3rd February with 3.5 hours of original programming per day (7 serials). The content spend per day is Rs 17 lakh.

The total cost including content and marketing for Bangla channel will be in the range of Rs 80-90 crore for first year and will go up in the second year. It expects the channel to generate Rs 125-150 crore revenue by FY21.

Only theatrical portion for the ‘Sarkar’ movie revenue has been booked during 3Q, while revenue from satellite and digital rights will be accounted in 4Q. The total movie production cost stood at Rs 108 crore, of which Rs 80 crore was recognised in 3Q while the balance will be recognised in 4Q.

The management alluded that it will invest in movies in a way that the money is monetized quickly. ‘Kanchana 3’ is expected to be released by mid-April 2020.

The investments in movie for FY19 are estimated to be in the range of Rs 400 crore and 20-25% higher for FY20.

On the broadcast side, the company plans to launch 2-3 more shows on commission model basis in non-prime time hours on Sun TV.

During the third quarter, the company’s ad revenue stood at Rs 382 crore, broadcasting revenue at Rs 18 crore, international subscription revenue at Rs 4.6 crore, cable revenue at Rs 118 crore, DTH revenue at Rs 232 crore and movie revenue at Rs 108 crore.

Ad revenue grew in double-digit on the back of festive season uptick. The company saw strong 18-19% ad growth in Telugu and Kannada genre, while Tamil and Malayalam grew at modest pace.

Investments in Sun Life channel and two new commission model based serials on Sun TV channel as well as some reality shows and audio launches led to higher content cost in 3Q.

The management also noted that extrapolation of viewership numbers by BARC (due to turning off the analog signals) has not been beneficial for Sun TV. Currently, there are four shows on commission model in prime time hours and 2 in non-prime time hours.

The company’s cash balance as on 31st December 2018 stood at Rs 2090 crore.

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