TV18: Uplinking to Growth Aspirations

TV18

Billionaire Mukesh Ambani owned television broadcaster TV18 managed to post strong performance during the October-December quarter, overcoming several challenges that include the competitive environment, regulatory challenges, and decline in viewership.

TV18’s consolidated revenue during the quarter under review declined 3% to Rs 1,425 crore due to sluggishness in the advertising market. Amidst the weak ad environment, the subscription revenue provided the silver lining for the company.

The company’s consolidated operating EBITDA surged 145% to Rs 281 crore driven by content partnerships, subscription growth, and substantial cost controls.

The consolidated net profit for the period stood at Rs 205 crore.

Operating EBITDA from the entertainment business comprising Viacom18, AETN18, IndiaCast increased 262% to Rs 245 crore from Rs 68 crore.

The news business operating profit declined 24% to Rs 36 crore from Rs 47 crore.

On the ad revenue front, the company stated that advertising recovered around the festive season, however, it continued to remain under pressure.

Further, the prevalent weakness in macro-environment and sluggish spending appetite by advertisers continued to drag ad-revenue down for both News and Entertainment.

It also pointed out that the shift of channels from DD Free Dish to pay ecosystem impacted Hindi GEC ad revenues for all the top broadcasters.

The company noted that the government initiatives to boost growth and a natural refresh-and-recalibration of ad-budgets should revive ad-growth as we head towards the new fiscal.

Growth in annuity-style revenue filled in for the temporary dip in cyclical advertising revenue. Ex-film, the entertainment revenue was flat. Content monetization through partnership deals in both B2B and B2C helped offset the decline in broadcast advertising.

Given the difficult ad-environment and continued regulatory flux, the rise in rankings for flagship channels is a positive indicator for the future.

TV18 is constantly adjusting its programming and business model for the continual technology, consumer and regulatory changes in the business.

During the quarter, the company’s kid’s edutainment product Voot Kids progressed to a commercial launch with promotional plans. Voot’s freemium version with offerings like digital-exclusive and digital-first broadcast content as well as original content behind a pay-wall is slated to be launched soon.

We believe the strongest comfort for TV18 comes from the parentage of TV18, a 51.17% subsidiary of Network18. RIL is the sole beneficiary of IMT, which holds the majority stake in Network18.

RIL is India’s largest private-sector enterprise with presence across the energy value chain, apart from retail, oil marketing, and telecom sectors.

We expect that the RIL Group will continue to provide strong support to TV18, whenever required, as it is a key player in the media value chain that RIL is focusing on.

The RIL Group considers the media businesses as a key element for its telecom thrust and digital businesses.

Hence TV18 is likely to benefit from synergies with the telecom venture and the overall increasing 4G and broadband penetration.

The standalone business profile of TV18 comprises the general and business news channels— CNBC TV18, CNBC Awaaz, CNBC Bajar, CNN News18, News18 India and regional news channels.

At a consolidated business level, including its key JV, Viacom18, TV18’s business profile includes Hindi and English general entertainment channels (GECs), infotainment, regional entertainment and news channels, as well as the content-asset monetization business.

Furthermore, in February 2018, Viacom18 launched Colors Tamil, the Group’s foray into the Tamil regional entertainment market.

The company launched its second movie channel and its first regional movie channel, Colors Kannada Cinema, in September 2018, taking the number of RGECs to eight. It recently launched another movie channel, Colors Gujarati Cinema to further strengthen its presence in the Gujarati regional space.

TV18 thus has a strong bouquet of channels across genres, as reflected by its healthy market share in viewership ratings. Its share in the overall news genre increased to 11.5% in FY2019 from 9% in FY2017

Net net we understand that the turnaround in TV18’s business operations looks strong and going ahead we believe it can do better considering its wide content reach and growing customer base.

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