Ad & subscription revenues buoy Network18’s Q3FY19 earnings by 20%

Network18 Media & Investments Limited has reported an 18 per cent YoY jump in operating EBITDA to Rs 88 crore in Q3FY19, despite continuing investments into recent launches – Colors Tamil and Colors Kannada Cinema. Operating revenue rose 20 per cent YoY led by advertising tailwinds, successful movies like ‘Andhadhun’, and healthy growth in subscription income. Operating leverage drove profitability, especially led by continued strong performance of regional channels across both our news and entertainment portfolios.

The industry ad-environment was buoyant during the past quarter, though ad-spends were more concentrated around festive season and strong properties than previous years.

Broadcast subsidiary TV18 posted 22 per cent revenue growth on a comparable basis. Growing ad-spends in regional channels (news, led by regional elections; and entertainment, driven by rising consumption and value-perception) was a consistent theme for the TV18 channel portfolio.

Subscription revenue for the entire bouquet grew 13 per cent YoY. The Group believes that it has created compelling bouquets along with a-la-carte channel pricing, as per the new TRAI tariff order, which promises to increase transparency in the broadcast value-chain.

News bouquet (20 channels) cemented its No. 1 position, with TV18’s viewership share in news rising to a highest-ever 11.5 per cent. News revenue grew at a robust 16 per cent, while regional news revenue grew 27 per cent YoY led by the viewership share of the group’s regional news cluster rising further to 6 per cent, compared to 2.5 per cent two years ago.

Hindi news channel News18 India solidified its No. 2 ranking, emerging as the primary engine of growth. However, the overall English news genre continued to face pressure, even as the business news channels maintained top positions amidst choppy markets.

Regional News losses have shrunk 68 per cent YoY to Rs 9 crore. Rise in Government/ election-related ad spends substantially pruned gestation losses of the group’s 8 regional channels launched over FY15-17. Active cost control and efficiencies of scale also played a key role in reducing the drag.

The Entertainment bouquet (comprising Viacom18’s 31 channels + AETN18’s 4 infotainment channels) is No. 3 amongst national players, with share of entertainment viewership maintained at 11.2 per cent. Entertainment portfolio revenue grew 23 per cent YoY. As stated in previous quarters, some high value-and-impact Hindi GEC programming at Viacom18 was strategically shifted from H1 to H2 to coincide with market-appetite. This has resulted in improved topline growth, and has expectedly also partially limited the margin-expansion for the quarter.

The Movie production & distribution revenue under Viacom18 Motion Pictures was Rs 106 crore, compared to a low base of Rs 20 crore in Q3FY18.

Network18’s digital content properties reported a reach of 24 per cent of the total news consumption audience. Network18’s digital revenues from prime properties MoneyControl, News18 and Firstpost grew 27 per cent YoY to Rs 45 crore in Q3. However, other businesses, including content production and print, dragged overall revenue growth.

Operating margin fell due to investments in revamp and extension of MoneyControl and Firstpost brands. While MoneyControl took initial steps to venture into transactions (mutual fund distribution) with the launch of MC Transact; Firstpost shall soon be extended to discerning Print audiences through a weekly news-edition.

Cricket portal CricketNext (No. 3 portal in India) was relaunched with a dedicated app. Traffic on Regional News content on News18.com rose 55 per cent, indicating the rising strength of the brand and the tailwinds in vernacular consumption in digital too, alongside broadcasting.

Commenting on the Q3FY19 performance, Adil Zainulbhai, Chairman of Network18, said, “Regional content consumption continues to see robust growth across all parts of the media industry that we play in, whether broadcasting or digital; and straddling news, entertainment and film. We continue to invest in digital with an eye on the future. We are extending our powerful brands across geographies, business models and mediums, to create the most compelling portfolio of properties in the opportunity-laden Indian media sector.”