Weak ad-environment hits Network18 & TV18â€™s Q3 FY2020 revenues

Network18 Media & Investments and TV18 Broadcast have announced the results for the quarter and nine months ended December 31, 2019.

Network18 has reported consolidated operating revenue of Rs 1,474 crore in Q3 FY2020, as against Rs 1,524 crore in Q3 FY2019, a decline of -3 per cent. On the other hand, consolidated operating EBIDTA jumped by 204 per cent to Rs 268 crore in Q3 FY2020, from Rs 88 crore in the corresponding quarter of the previous fiscal.

TV18, too, saw a decline of 3 per cent in its Q3 FY2020 consolidated operating revenue at Rs 1,425 crore, from Rs 1,475 crore in Q3 of the previous fiscal. Meanwhile, its consolidated operating EBIDTA saw a growth of 145 per cent to Rs 281 crore in this quarter, as against Rs 115 crore in Q3 FY2019.

The News bouquet, comprising 20 channels, was numero uno in terms of reach and viewership market-share. However, TV18’s Q3 average viewership share in news was 10.2 per cent, down from 10.9 per cent in Q2. The bouquet regained the #1 viewership ranking by the end of the quarter.

Q3 FY2020 operating revenue for News was near-flat YoY. Headwinds for the BFSI sector, weak government spends, and limited international advertising compared with last year dragged growth.

Highlights for the quarter

Linear TV subscription benefits (B2C) continue to accrue; 40 per cent YoY revenue growth was seen in Q3: Implementation of the NTO (New Tariff Order) has created a transparent and non-discriminatory B2C regime, which continues to boost the Network’s TV subscription revenue. Improved distribution tie-ups across cable and telcos have brought the consumer closer to its content bouquet at an affordable optimum price.

Monetisation of content through digital partnerships (B2B) driving step-up in profitability: In line with the Network’s strategy of being platform agnostic, the group stitched multiple partnerships with notable digital platforms for serving their users a discerning selection of its content.

Advertising recovered around festive season, but continued to remain under pressure: The prevalent weakness in macro-environment and sluggish spending appetite by advertisers continued to drag ad-revenue down YoY for both News and Entertainment. Shift of channels from DD Freedish to Pay ecosystem continues to impact Hindi GEC ad-revenues for all the top broadcasters. Government initiatives to boost growth and a natural refresh-and-recalibration of ad-budgets are expected to revive ad-growth as the industry heads towards the new fiscal.

Digital-only subscription (B2C) being incubated as a growth driver for the future: The recently launched subscription offering MoneyControl Pro continued its growth momentum, with subscriber base crossing over 1 lakh. Kids’ 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.

Entertainment bouquet (Viacom18’s 32 channels + AETN18’s 4 infotainment channels) is #3 amongst national players: TV18 group’s Q3 entertainment viewership share rose to 10.1 per cent, as against 9.2 per cent last quarter. Content partnerships, Subscription growth and substantial cost controls boosted EBITDA.

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

In sync with the ad-environment, operating costs were streamlined. Both quantum and cost of programming were tweaked for efficiency, and focus was maintained on key shows. Success of marquee shows like ‘Bigg Boss’ and ‘Naagin’ pushed Colors back to the top of the charts.

Continued investments in future growth engines: Investments to the tune of Rs 13 crore in regional movie channels (Kannada and Gujarati Cinema) and subscription-offerings (VOOT Kids, Freemium and International) were made during Q3. EBITDA includes impact from initiatives launched more than a year ago, but are in gestation, including Voot and Colors Tamil.

Network18 digital is #2 in digital news/ information category, has ~207 million unique visitors.

However, Digital revenues were impacted by the weak ad-environment. But sharp display advertising growth in News18.com vernacular was witnessed, alluding to the growth potential at the intersection of regional and digital media. Digital losses reduced sharply, led by focus on operating cost reductions.

Commenting on the Q3 FY2020 performance, Adil Zainulbhai, Chairman of Network18 and TV18, said, “Across broadcasting and digital, our emphasis has been on delivering value to the consumer, expanding the partner ecosystem and raising profitability. Amidst a difficult ad-environment and continued regulatory flux, the rise in rankings for flagship channels is a positive indicator for the future. We are constantly adjusting our programming and business model for the continual technology, consumer and regulatory changes in the business. We continue to invest in key areas of growth, expand our reach, and explore new avenues of monetisation.”