Network18's ad revenue inches up amid recovery; stock trades higher

Ad-recovery, Cost-efficiency drove Entertainment EBITDA margin to 25%, its highest ever, said the company.

Jan 20, 2021 10:01 IST India Infoline News Service

Network18 Media & Investments Limited has announced its results for the quarter and nine months ended 31st December 2020, taking its stocks higher. The company was trading at Rs38.85 per piece up by 1.30% on the BSE at around 10:16PM.
  • Q3 Operating EBITDA up 21% YoY, Operating Margins continued to grow to a healthy ~23%.
    • Ad-recovery, Cost-efficiency drove Entertainment EBITDA margin to 25%, its highest ever 
    • TV News EBITDA margin ramped-up to ~19%; marking 4 years of consistent improvement
    • Digital News EBITDA margins rose to ~9%, after achieving break-even in the last quarter
    • PAT rose to Rs 333 Cr, up >2x YoY on improved performance, lower finance costs & tax reversals.
  • Ad-revenue inched up YoY; Recovery has been sharp and broad-based.
    • Entertainment fully recovered from COVID impact, led by programming returning to normalcy and high-impact content driving ad-yields up during festive season. Viewership remained strong despite sports (IPL) and peer non-fiction shows competing for eyeballs.
    • Sustained focus on high-quality reportage sans hyperbole continues to bolster the News business, even amidst the absence of BARC ratings during the quarter
    • Digital News revenue rose >50% YoY for the second quarter in a row, underscoring the success of the company's platforms in a fast-growing but hyper-competitive domain.
  • Subscription revenue up 2% YoY; lockdown impact on some consumer segments tapering.
    • Domestic subscription revenue remained strong, offset stress in international
    • Improved distribution tie-ups for TV and Digital continue to drive subscription growth
  • Cost controls maintained even amidst monetization-linked thrust during festive season
    • Broad-based cost controls implemented across business lines had improved efficiencies; driving margin uptick.
    • Opex was down 9% YoY even as we had a full content roster in the festive season, and linked thrust on marketing and distribution
  • TV and Digital media consumption is growing in tandem, across delivery platforms
    • TV viewership (ex-News, as ratings have been blacked out during Q3) remains elevated ~10% vs pre-COVID levels on a consistent basis, even as lockdowns taper.
    • Digital consumption of media continues to gain traction and currency, both through directto-customer offerings and telco-bundles.
  • Digital gained momentum led by network-content core, interactivity & distribution thrust
    • Voot video-views rose 30% QoQ, driven by complete resumption of network content. With an average daily time spent per viewer (TSV) of >50 minutes, Voot continued to be a leader amongst direct peers. Niche edutainment product Voot Kids has a TSV of 86 minutes.
    • Apart from digital interactivity in non-fiction TV shows like Bigg Boss being dialled-up, innovative interactive elements were introduced on Voot for even fiction shows. Interactive games were launched as the 5th vertical of Voot Kids.
    • Pay-product Voot Select witnessed robust growth in subscribers, boosted by novel digital exclusives like a 24 hthe company's Bigg Boss channel and content-around-content. MC Pro gained traction from AI led analytical tools for investors, and access to content from renowned global publications like Financial Times.
    • Bundling of Voot with telcos, digital extensions of traditional distributors, and high-end nonmedia digital platforms further drove reach. Web-app of Voot Kids was unveiled too.
    • MC Pro and Voot Select cross-promotion on Diwali drove user acquisition.
Adil Zainulbhai, Chairman of Network18, said: “The group has fully recovered from the effects of the pandemic, even as safety measures and innovative solutions to logistical challenges continue to be deployed. We have treated this period as an opportunity to rethink the company's businesses, and are emerging stronger and ready for the post-COVID world.

As TV consumption remains healthy and Digital adoption grows in tandem, we believe the group is well positioned to straddle the space. The benefits of cost controls effected over the past year are now visible, as all three verticals are at much improved profitability levels. In this new year that is bringing in new hope, the company's constant endeavor will be to create value and deliver on the company's promise of class-leading content.”

Business summary
  • News bouquet (20 channels) is India’s largest and most diversified in scope and reach.
    • News network (which is entirely pay, in contrast to most peers) has both the consumer connect and the content backbone to continue to grow despite the blackout of BARC ratings in the genre.
    • TV News ad-revenue grew healthily led by monetization tailwinds and growing acceptance of the News18 brand.
    • Operating margins have improved to their highest level since the launch of multiple regional news channels in the FY15-17 period, as their operations scale up further.
  • Entertainment bouquet (Viacom18’s 34 channels + AETN18’s 2 infotainment channels) share of TV entertainment was maintained at ~10.7%, up sharply from a low of ~9.1% in Q1.
    • the company's Hindi GECs performed strongly on both platforms (Pay and FTA), driving up monetization amidst stiff competition for eyeballs and advertiser wallets in the festive season. Regional GECs continue to recover with a lag, in line with demand from regional advertisers. Niche genres like Kids and Youth & Music have also bounced back, as ad-demand has unlocked.
    • EBITDA includes impact from initiatives launched more than a year ago but are in gestation, mainly Colors Tamil and Voot. The advertising-led platform has scaled up and become profitable, while investments into digital content creation and acquisition for Voot Select continue to be made.
  • Network18 digital is #2 in digital news / information category, has ~173 mn unique visitors
    • Digital News revenues grew >50% YoY for the second consecutive quarter, led by strong performance of flagships MoneyControl and News18.com. Digital News business has swung into profitability since Q2, as non-remunerative costs were trimmed and ad-spends revived.
    • Voot witnessed a significant improvement in viewership as fresh content resumed fully, and marquee content drove MAUs to new peaks.

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