TV18 Q4 rev excluding films takes a hit due to TRAI tariff order roll-out

MUMBAI: TV18 Broadcast’s revenue excluding film production has dropped 6% to Rs 1133 crore for the quarter ended 31st March compared to Rs 1211 crore in the corresponding quarter of the previous fiscal due to the Telecom Regulatory Authority of India’s (TRAI) new tariff order roll-out.

The consolidated revenue dropped 23% to Rs 1182 crore from Rs 1540 crore since the Q4 FY18 had seen the release of the movie ‘Padmaavat’. Apart from the flux around the implementation of the new tariff order, the Nidahas trophy cricket and other live events and union budget coverage in the base quarter which were absent this year.

The consolidated operating EBITDA was down 23% at Rs 52 crore as against Rs 67 crore in the year-ago period. The company noted that EBITDA was dragged by NTO/Freedish shift impact and new initiative investments into Colors Kannada Cinema and Voot expansion (International and Voot Kids).

Adjusting for Rs 24 crore operating losses of these new initiatives, BAU EBITDA was Rs 44 crore, up 12% YoY. BAU margins for Entertainment grew to 5% from 3.2% in Q4FY18. Entertainment EBITDA also encapsulates investments into projects that were launched more than 1 year ago but are still under gestation.

TV18 chairman Adil Zainulbhai said, “In a year of unprecedented change, we continue to invest in media and position ourselves to become a leader in the industry. The new tariff order has thrown up an opportunity for broadcasters to tailor content creation and curation as well as monetization dynamics much more closely to the end consumer; thereby aligning supply to real demand. As regional and digital content takes over the mantle of driving growth from national GECs, it is even more imperative that we stitch together an ecosystem which can provide everything the new-age Indian needs.”

In its Q4 note, the company stated that advertisers pulled back spends due to lack of stable viewership data. Viewership has been impacted for all major broadcasters as the process of consumers choosing channels/packs and on-ground realignments in distribution value-chain is still underway. This has led to volatile viewership (BARC did not publish data from Week 5 – Week 12 2019), which is expected to take some more time to settle.

It further stated that gross subscription revenue growth has been impacted too, as subscriber base has yet to normalise due to implementation challenges. TV18 has increased its marketing intensity, as consumers are in the midst of exercising their choice. However, subscription dynamics are likely to improve in the future as the broadcasting business moves to B2C (pull-based) rather than B2B (push-based).

“Our channels (through ‘Colors wala pack’ as well as distributor packs) have witnessed strong uptake in this transition phase; led by the breadth of content at a value price-point, and improved distribution tie-ups,” TV18 said in a statement.

The company also shifted its Free-To-Air (FTA) GECs to pay during the quarter. FTA GEC Rishtey and Hindi movie channel Rishtey Cineplex were withdrawn from the DD Freedish platform. We re-launched these from 1st Mar 2019 as pay-channels Colors Rishtey (with some original programming) and Colors Cineplex (with a reinforced movie library) respectively.

The company stated that Colors Cineplex now plugs the whitespace it had in the pay Hindi movie genre. Moving away from Freedish distribution impacted their reach and consequently hurt late-Q4 viewership and ad-monetization. “However, we believe that in the new tariff regime pay-channels shall have better consumer connect as well as distribution economics in the medium-term. This shall also improve the monetisation of primary pay-GEC Colors, which had faced some viewership/ advertiser cannibalisation,” it added.

TV18’s news business posted 16% growth in operating EBITDA at Rs 31 crore as against Rs 27 crore. Revenue remained flat at Rs 288 crore as against Rs 286 crore. Entertainment business’ operating EBITDA was down 49% at Rs 20 crore from Rs 40 crore while revenue fell 29% to Rs 893 crore from Rs 1254 crore. Subscription revenue increased by 7% to Rs 332 crore.

For the full fiscal, the standalone news EBITDA increased 179% to Rs 92 crore while revenue jumped 14% to Rs 1079 crore. The entertainment business EBITDA increased 6% to Rs 221 crore while revenue remained at Rs 3863 crore. Subscription revenue increased by 11% to Rs 1268 crore. On a consolidated basis, the EBITDA was up 30% at Rs 314 crore while revenue jumped 3% at Rs 4943 crore.

The company stated that TV18 News still retains its leadership even versus FTA peers despite being a pay-network. TV18’s viewership share in the news was 11.5% (pre-NTO). Viewership share has fallen to 9.3% in the last week of March-19. National News revenue was near-flat, as Business News was especially impacted by the lack of a Union budget this year on account of elections (FY20 will now likely have 2 budgets). Improved performance of Hindi News and growing election-linked ad-spends countered genre pressures in English & Business news, the impact of NTO, and new launches by competition.

Regional News losses have shrunk 32% YoY to Rs 20 crore led 6% YoY revenue growth on Government/ election-related ad-spends. Active cost control and efficiencies of scale also played a key role in reducing the drag of our 8 regional channels launched over FY15-17.

Entertainment bouquet (Viacom18’s 31 channels + AETN18’s 4 infotainment channels) is #3 amongst national players: Our share of entertainment viewership rose to 11.7% (pre-NTO). Post NTO and shift from Freedish, the viewership share of top 4 broadcasters (ex-sports) readjusted by 2 to 4% each, and our viewership share is 8.6% presently.