Quarterly Performance for December 2013 (Consolidated)

The consolidated operating revenues increased by 3% to Rs 525.47 crore. The advertisement revenue increased by 3% to Rs 322.8 crore, subscription revenue increased by 51% to Rs 44.1 crore and distribution revenue (includes 75% of IndiaCast) grew 35% to Rs 194.6 crore. There was decline in motion pictures & TIFC by 32% to Rs 35.5 crore. While the News and Infotainment advertising environment continues to be sluggish, Entertainment led by Colors and MTV delivered strong double digit advertising growth.

Net Distribution Income stood at Rs. 43.6 crore. (Effective 1st July 2012, IndiaCast is now managing TV18's and Viacom18's distribution operations. Pursuant to this development, Broadcast operations of TV18 are now reporting net revenues from distribution starting Q2 FY13. Net Distribution Income may be understood as subscription revenues earned by the company minus carriage/placement fees or any promotions/commission paid. Please note that the Net Distribution Income differs from the Subscription Revenues in consolidated numbers because a few of the entities are still in negative territory and hence, net expenses on account of carriage form a part of the marketing and distribution expenses.)

The revenue from media operation segment grew by 9% to Rs 503.59 crore while that of film production and distribution declined by 35% to Rs 35.53 crore.

OPM has inclined by 536 bps at 14.7%. As a % of sales, the programming cost declined by 320 bps to 27.1%, employee cost by 10 bps to 12.8% and marketing, distribution & promotion expenses by 730 bps to 26.8%. The resultant operating profits was up by 61% at Rs 77.43 crore.

The PBIT margin from media operation inclined by 901 bps to 16.1%, thus resulting in PBIT of Rs 81.24 crore, increased by 148%. The loss at PBIT level for film production and distribution business stood at Rs 14.28 crore.

Other income decreased 58% at Rs 6.06 crore. The interest cost decreased by 46% to Rs 17.11 crore. Depreciation charge increased 14% at Rs 12.08 crore. The profit before tax inclined by 168% tp Rs 54.3 crore.

The tax outgo inclined by 74% to Rs 3.08 crore. After considering minority interest, the net profit increased by 143% to Rs 51.68 crore due to margin expansion and fall in interest cost.

Business News Operations:- The revenue grew by 3% to Rs 80.7 crore. The operating margin inclined by 215 bps to 41.51%. The operating profit was up by 9% to Rs 33.5 crore. CNBC-TV18 and CNBC Awaaz sustained their strong market leadership in the genre during the quarter.

General News Operations:- The revenue de-grew by 7% to Rs 66.9 crore. The operating margin inclined by 1290 bps to 22.42%. The operating profit was up by 117% to Rs 15 crore. CNN-IBN and IBN7 continued their strong viewership performance reaching a combined monthly average of 27 million viewers in the quarter (Source: TAM, CS AB 15+, All India, all days, 24 hrs, 1st Oct to 28th Dec'13). The IBN Network was a leader in coverage during the state assembly elections in the quarter.

Infotainment-History TV18 :- History TV18 continued towards a profitable trajectory in the current quarter, despite softness in the advertising environment. The revenue de-grew by 32% to Rs 7.1 crore. The operating profit stood at Rs 2.1 crore.

Entertainment Business:- The revenues for Viacom 18 stood at Rs 557.6 crore, up by 18%. Operating profits was up by 84% to Rs 56 crore. OPM has increased by 360 bps to 10.04%

Colors emerged as a strong No. 2 in the current quarter, growing its average weekly gross viewership to 464 million. Colors was the No.1 channel during weekends with an average market share of 26%. It continued to lead the genre in terms of content innovation and differentiated programming. ‘24', the marquee non-fiction property made a stupendous debut during the quarter and attracted 117 million viewers across India. ‘Big Boss 7' delivered 164 million viewers and achieved the highest-ever season average in viewership. ‘Comedy Nights with Kapil' continued its run as the No.1 non-fiction show in the genre. (Source: TAM, CS4+, HSM, All Days, Q3).

MTV continued its leadership in viewership in the genre reaching 52 million viewers and further cemented its position as India's No.1 youth brand in digital engagement with over 20 million fans on Facebook and 1 million followers on Twitter. The Nick franchise and English entertainment channels - Vh1 and Comedy Central delivered strong growth in their viewership performance and consumer engagement.

Viacom18 Motion Pictures had two Hindi releases – ‘Boss' and ‘What the Fish' during the quarter in addition to ‘Bha Ji in Problem' which was a Punjabi release.

ETV News:- The revenue grew by 40% to Rs 36.9 crore and operating profits grew by 200% to Rs 20 crore. The news channels sustained their strong viewership performance, strongly aided by the state assembly elections.

ETV Entertainment:- It sharply reduced its losses from Rs 35 crore in Q2 to Rs 6 crore in Q3. ETV Kannada and ETV Marathi saw a sharp improvement in their viewership performance from the last two quarters.

Proforma results for Decemeber 2013

Proforma reported revenues on a consolidated basis stood at Rs 595.9 crore, up 5%. Proforma operating profit was up by 79% to Rs 94.5 crore led by a strong performance in ETV News.

Performance for the nine months ended December 2013 (Consolidated)

The consolidated operating revenues increased by 15% to Rs 1404.83 crore. The revenue from media operation segment grew by 16% to Rs 1316.05 crore while from film production and distribution declined by 2% to Rs 116.38 crore.

OPM has inclined by 368 bps at 10%. The resultant operating profits was up by 81% at Rs 140.56 crore.

The PBIT margin from media operation inclined by 447 bps to 9.9%, thus resulting in PBIT of Rs 130.72 crore, increased by 111%. The loss at PBIT level in film production and distribution business inclined by 198% to Rs 19.62 crore.

Other income decreased 14% at Rs 23.45 crore. The interest cost decreased by 60% to Rs 47.37 crore. Depreciation charge increased 13% at Rs 35.16 crore. The profit before tax and EO stood at Rs 81.49 crore against loss of Rs 45.45 crore in the corresponding period of last year.

There was EO expense of Rs 10.28 crore which is one time severance payouts as part of the company's restructuring initiatives to realize operational synergies across the news network. The tax outgo declined by 22% to Rs 8.51 crore. After considering minority interest, the net profit stood at Rs 67.72 crore against loss of Rs 42.75 crore in the corresponding period of last year.

Management Comments:

Raghav Bahl, Managing Director, Network18 said:-

We are greatly enthused by the strong performance of TV18 despite the continued uncertainty in the macro-economic landscape. While environmental risks may continue in the medium term, we are confident of maintaining our growth trajectory. During the quarter, our pre-tax profits almost tripled due to the robust operating performance of our broadcast operations and a significantly deleveraged balance sheet. We are now in the sustained value creation phase of our journey even as we look to further strengthen our existing operations and consolidate our regional acquisition.

B. Saikumar, Group CEO said:-

It has been a stellar quarter for our broadcast operations, which grew their margins substantially in a challenging environment. Our News business realised value from operating efficiencies. Our Entertainment operations at Viacom18, led by Colors delivered a healthy performance even as Motion Pictures saw losses in this quarter. Infotainment operations at A+E Networks I TV18 broke into positive territory and IndiaCast continued on its robust growth trajectory. We look forward to building on network synergies with the launches of Rishtey India, MTV Indies and CNBC Bajar, while sustaining our trajectory of profitable growth in the year ahead.

Other Developments

The Company has successfully completed the acquisition of 100% equity securities of Equator Trading Enterprises Private Limited (Promoters of ETV) w. e. f. 22 January 2014. The Company has paid a sum of Rs 2053 crore to complete the transaction as per the Share Purchase Agreement. The Company is holding 50% Interest In ETV Non Telugu General Entertainment Channels, as an asset held for sale and this Is proposed to be transferred to a Group Company.

Shareholding Pattern

The promoter holds 57.04% stake in the company.

The promoters shares pledged are nil.

Valuation

The scrip is trading around Rs 22.1