TV18’s subs rev registers strong growth in Q2 as ad environment remains tepid

MUMBAI: TV18 Broadcast has registered strong growth in subscription revenue even as ad revenue growth continues to remain challenging. The company’s consolidated operating profit dipped 3% to Rs 105 crore for the quarter ended 30th September as against Rs 108 crore in the same quarter of the previous fiscal.

Sharp pullback in broadcast costs through optimisations raised EBITDA margins to 11.4% vs 9.9% in Q2FY19. This is despite investments to the tune of Rs 13 crore in regional movie channels (Kannada and Gujarati Cinema) and paid-offerings (Voot Kids & International).

Excluding these, business as usual (BAU) margins improved to 12.9%. BAU margins include the impact of initiatives launched more than a year ago but are still in gestation, including Voot and Colors Tamil.

The company’s consolidated operating revenue fell 6% to Rs 1127 crore as against Rs 1198 crore. Revenue from news business declined 2% to Rs 262 crore while the revenue from the entertainment business was down 7% to Rs 865 crore.

Subscription income grew by 43% to Rs 461 crore, continuing the 48% growth YoY witnessed in Q1.

TV18 stated that the implementation of the new tariff order (NTO) has created a transparent and non-discriminatory B2C regime. Flux around the NTO has largely settled, though the cable segment continues to face some billing and reporting issues.

“Our domestic yields have improved, led by the strength of our bouquet as demonstrated by consumer choice for our channels and packs. Improved distribution tie-ups give our channel portfolio unparalleled reach across TV & Digital,” it added.

The company noted that the advertising environment continued to remain tepid during much of the past quarter. Weak macro-economic trends dragged down consumer spends and depressed broader corporate appetite for above-the-line marketing activity.

“However, certain categories of new-economy advertisers were bright spots, and tailwinds in regional and digital consumption continued to attract attention,” TV18 noted.

The company said that ad-spends began to rise led by the advent of the festive season late in the quarter, and big-ticket programmes and events planned around the same. “We are hopeful that Government policies aimed at stimulating demand shall aid the recovery as we head into H2.”

TV18 chairman Adil Zainulbhai said, “The advertising environment continues to remain challenging; however, positivity in subscription income and cost optimizations through tie-ups and tech deployments have filled-in the gap. The breadth of offerings remains our calling card, and the group continues to invest along the 2 identified axes of growth, Regional and Digital.”

During the quarter, news bouquet (20 channels) maintained its top position while increasing the viewership share further to 10.9%, up from 10.1% in Q1 consolidating its leadership.

TV18 stated that the news business revenue declined as election tailwinds witnessed in Q1 tapered off. Weakness in financial markets, lack of government ad-spending and limited international advertising compared with last year dragged growth, it added.

The company has kept a tight rein on costs with Opex becoming near-flat YoY. The news business remains firmly above breakeven, as regional news bouquet continues to ramp-up and move towards profitability.

Entertainment bouquet (Viacom18’s 32 channels + AETN18’s 4 infotainment channels) is #3 amongst national players. TV18’s Q2 entertainment viewership share was 9.2%, vs 9.1% last quarter.

Macro-weakness and shift of channels from DD Freedish to Pay ecosystem continue to drag ad-revenues of GECs for the entire industry. Pushing of some high-end content vs last year for better monetisation (i.e. planned delay in the launch of Big Boss, shifting of IIFA awards to Q3, etc) makes the base not fully comparable.

The group’s video streaming platform Voot will soon be launching its freemium version with offerings like digital exclusive and digital-first broadcast content as well as original content behind a pay-wall. Kids edutainment product Voot Kids was soft-launched in Q1 with a niche and highly differentiated offering and shall be progressing to commercial operations behind a pay-wall in this fiscal.

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