Network18 Media & Investments Limited today announced its results for the quarter ended September 30, 2022. The company clocked a consolidated revenue growth of 12 pc YoY to Rs 1,549 crore, according to the company official statement.
TV18’s consolidated revenue grew by 13 pc YoY to Rs. 1473 crore.
“Network18 Group continued to invest in content, marketing, and distribution initiatives, to create a strong foundation for long-term growth, leading to a 34 pc increase in operating costs,” read the company statement.
Operating highlights and financial performance
TV18’s Q2 revenue was down 3 pc YoY, primarily due to de-growth in advertising revenue. News ad inventory declined by 10 pc at industry level and the drop was even higher for our network as we continued to optimize inventory on key channels. However, the impact on revenue was much lower as the scale-up of events-led monetisation partially offset the loss of display advertising. The Operating costs for the quarter increased by 20 pc, primarily driven by content cost and distribution initiatives. The investments have started showing positive results with a visible improvement in viewership metrics of our key channels over the last 2 quarters. However, because of a subdued advertising environment, increase in viewership did not translate into commensurate revenue. We believe that this investment is critical to build a strong foundation for growth which will help our portfolio fortify competitive positions across markets and drive strong revenue traction going forward.
In the entertainment segment, the subdued advertising environment. Adjusting for the impact of withdrawal of Colors Rishtey from DD FreeDish, ad revenue grew in high single digits on a YoY basis, despite the challenging environment.
The operating costs increased by 15 pc (excluding movie production), due to higher content and marketing spends. Content cost was driven by higher number of hours (TV and Digital), higher episodic costs, and increased spends in Regional markets.
The profitability of the business was impacted as the advertising revenue lagged expectations despite content investments helping us strengthen the ratings in certain markets. In addition, increased investments in Digital and drop in Colors Rishtey ad revenue also impacted EBITDA.
Economic sentiment remained weak during the quarter with high inflation posing a challenge for companies, especially the FMCG sector. Brands held back advertising spends on new product launches and sustenance campaigns due to these headwinds. Advertising spends by start-ups and e-com players also declined due to the difficult fund-raising environment. The Total TV ad inventory declined by 3 pc on a YoY basis with the news category seeing a drop of nearly 10 pc . As a result, ad revenue of our Entertainment segment was flat YoY while News ad revenue saw a decline. Entertainment business was also affected by the drop in Colors Rishtey revenue.
Digital segment, which had so far been largely unaffected by the macro environment, also got impacted by the slow down. After having delivered growth for 8 consecutive quarters, ad revenue of our Digital news business was flat on a YoY basis.
“Despite a challenging environment, Network18 Group continued to ramp up its investments to establish strong competitive positions across Entertainment and News segments, in line with its growth plans. While these investments impacted profitability as costs grew faster than revenue, it has had a positive impact on operating metrics,” company statement read.
Adil Zainulbhai, Chairman of Network18, said, “The first half of the fiscal has been challenging for most sectors. However, we believe that this phase should only be a minor bump in the long runway for growth. Our presence across the full spectrum of content segments and platforms places us in a unique position to leverage the combined strengths of our assets. We have set clear objectives for our different business segments and are working on executing our plans in that direction. Despite the macro environment being less than ideal for growth currently, we continue to make investments which will help us create a strong foundation for long-term and will hold us in good stead as growth returns.“