TV18 Q3 operating EBITDA jumps 41% despite investments in Colors Tamil, Colors Kannada Cinema

MUMBAI: TV broadcast network TV18 reported a 41% jump in operating EBITDA to Rs. 115 crore in Q3FY19, despite continuing investments into recent launches like Colors Tamil and Colors Kannada Cinema. The company had posted an operating EBITDA of Rs 82 crore in Q3 FY18.

Operating revenue rose 22% YoY led by advertising tailwinds, successful movies like ‘Andhadhun’, and healthy growth in subscription income. Operating leverage drove profitability, especially led by continued strong performance of regional channels across both news and entertainment portfolios.

TV18 standalone operating EBITDA comprising the TV news business saw a 130% increase at Rs 47 crore as against Rs 20 crore. The standalone operating revenue has increased by 16% at Rs 290 crore from Rs 251 crore.

The operating EBITDA from the entertainment business comprising Viacom18, AETN18, and IndiaCast has increased by 11% to Rs 68 crore compared to Rs 61 crore. Revenue from the segment grew 23% to Rs 1185 crore from Rs 960 crore.

Entertainment EBITDA includes operating loss of Rs 31 crore on account of new initiatives – Colors Tamil (launched in mid-Q4FY18) and Colors Kannada Cinema (launched in late-Q2FY19). Adjusting for operating losses of these new initiatives (i.e. launches made over past 4 quarters), BAU margins for Entertainment grew to 8.3% from 6.4% in Q3FY18.

Entertainment EBITDA also encapsulates investments into projects planned for launch in coming quarters, as well as properties that were launched more than 1 year ago but are still under gestation.

TV18’s subscription revenue increased 13% to Rs 328 crore from Rs 292 crore in the year ago period.

Commenting on the result, Network18 chairman Adil Zainulbhai said, “TV18 has further solidified its leadership in as the top news player in the country, and our fast-growing entertainment portfolio is expanding our offerings as well as its core operating margins. Regional content consumption continues to be a key driver of growth across the board. We intend to continue investing to capture whitespaces and emerge as a leading, pipe-agnostic player in the broadcasting space.”

The company said that the industry ad-environment was buoyant during the past quarter, though ad-spends were more concentrated around festive season and strong properties than previous years.

Growing ad-spends in regional channels was a consistent theme for the TV18 channel portfolio. The ad growth at the regional news segment was led by state elections while the regional entertainment ad-growth was driven by rising consumption and value-perception.

The viewership share of TV18’s news bouquet of 20 channels was at its highest-ever at 11.5%. News revenue grew at a robust 16%. Regional news revenue grew 27% YoY led by the viewership share of regional news cluster rising further to 6%, vs 2.5% two years ago.

Hindi News channel News18 India solidified its number 2 ranking, emerging as the primary engine of growth. The overall English news genre continued to face pressure.

The business news channels maintained top positions amidst choppy markets. Regional News losses have shrunk 68% YoY to Rs 9 crore as the rise in Government/ election-related ad-spends substantially pruned gestation losses of the eight regional channels launched over FY15. Active cost control and efficiencies of scale also played a key role in reducing the drag.

The company stated that the entertainment bouquet is number 3 amongst national players with 11.2% share of entertainment viewership.

It further stated that some high-value and high-impact Hindi GEC programming at Viacom18 was strategically shifted from H1 to H2, to coincide with market-appetite. This has resulted in improved topline growth and has expectedly also partially limited the margin-expansion for the quarter.

The movie production & distribution revenue under Viacom18 Motion Pictures was Rs 106 Cr, vs a low base of Rs 20 Cr in Q3 FY18. Regional entertainment channels continued their viewership and monetization improvements across most of our geographies.

The scheme of arrangement for the merger by absorption of wholly-owned direct and indirect subsidiaries of TV18 with the parent has been approved by the National Company Law Tribunal (Mumbai bench). The scheme has become effective from 1st November 2018, the appointed date being 1st April 2016.

Accordingly, comparatives have been restated to include the financials of the transferor companies. The income tax provision for the current quarter and nine months ended 31st December 2018 includes the impact of the merger.

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