Network18 posts consolidated revenues of Rs. 836 croresin Q1FY18; a 3% YoY growth

Mumbai: Network18 posted consolidated revenues of Rs. 836 crores (including proportionate share of JVs) in Q1FY18, a 3% YoY growth, as growth in its broadcasting segment was partially offset by continuing weakness in TV shopping business. Profitability improved incrementally, led by lower losses in TV shopping and a steady ramp-up of the multiple new initiatives undertaken in Q1FY17.

Highlights for the quarter

• Impending GST implementation resulted in deferral of advertising spends in late Q1: While April-May witnessed robust revenue growth, June was substantially impacted by postponement in advertising spends; especially in mass-oriented genres. Nevertheless, we believe that this is a transitory impact and GST shall drive the informal economy towards the formal channel in the long-run, which will push up advertising spends.

• Listed subsidiary TV18 posted 4% revenue growth (including JVs): Revenue growth from Business news boosted TV18 standalone operating EBITDA. However, Regional news witnessed softness in revenues, and low profitability due to gestation losses. Entertainment revenues were aided by strong performance in niche genres and strength of the bouquet.

• Network18’s share of TV News viewership has risen to >9% over the last year: Viewership grew substantially, driven by resurgence in General news and increasing traction in Regional news. During the quarter, News18 India broke into the top 4 Hindi News channels (top 3 in prime-time), which is a sharp improvement over its #8 ranking last year.

• Viacom18’s share of entertainment viewership (ex-sports) has risen to ~10% vs<9% last fiscal. Rishtey has risen to #1 amongst all free-to-air (FTA) general entertainment channels; and even climbed to #2 amongst all GECs (Pay+FTA). Flagship channel Colors continues to drive revenues through a premium positioning targeted at urban markets.

• Digital properties showed a smart growth in traffic, and improved monetization as well in the quarter. Focus on revamping the product offering and improving the user experience has helped drive higher engagement, especially in MoneyControl.

• Consolidating on FY17 launches: Initiatives taken last year are at varying points of scale-up.

• HomeShop18 has improved its profitability partially through pruning costs, but weakness in this segment persists: The TV home-shopping business continues to face challenges due to a hit to cash-on-delivery payments since November, and stiff competition from e-commerce. GST roll-out is a positive for HomeShop18, as it eliminates the issue of state entry taxes. Management is keeping a tight leash on costs, and taking steps to revive the business.

• Network18 divested Burrp.com (food & restaurant listing and recommedation engine) to FoodfestaWellcare Pvt. Ltd., a subsidiary of Big tree Entertainment Pvt Ltd in July 2017, through a business transfer agreement as a going-concern on a slump-sale basis (link to exchange release). Bigtree owns and operates ticketing platform BookMyShow, and Burrp shall be a natural fit in its portfolio.

Mr. AdilZainulbhai, Chairman of Network18, said, “The digital space in India is witnessing an insatiable appetite for quality content, and Network18 continues to be at the forefront of providing the same in a frictionless manner across genres. We aim to marry vernacular and digital opportunities in India with our strength in linear media to fulfil the rising demand for content that is both targeted and available on-demand.”

Financials for the quarter:

• Consolidated Revenue (including proportionate share of Joint Ventures considered for segment reports) for the quarter ended 30th June, 2017 stood at Rs. 836 crores vs. Rs. 814 crores in the corresponding quarter last year.

• Segment Operating EBITDA on a consolidated basis, including the performance of Joint ventures for the quarter ended 30th June, 2017, stood at Rs. (51) crores vs Rs. (58) crores in the corresponding quarter last year.

• Consolidated Revenue as per Ind AS (accounting the JVs under Equity method) for the quarter ended 30th June, 2017 stood at Rs. 321 crores as compared to Rs. 352 crores in the corresponding quarter last year.

• Operating EBITDA on a consolidated basis under Ind AS for the quarter ended 30th June, 2017 stood at Rs. (46) crores, vsRs. (74) crores in the corresponding quarter last year.

All launches made in FY16-17 are now part of our business-as-usual operations and reporting.