Network18 Media and Investments reported a 12 percent on-year increase in operating revenues in the third quarter of FY23 to Rs 1,850 crore driven by its entertainment segment.
The 12 percent rise in operating revenues happened despite a challenging macroeconomic environment that dampened advertising demand, in contrast to the strong festival season demand seen a year ago. Not only were TV impressions down 5 percent from a year ago, but the digital segment also faced headwinds as brands pulled back on performance marketing spending, the company said.
This, coupled with the company’s continued investments in content, led to operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of Rs 2 crore for the quarter that ended December 2022, compared with Rs 373 crore a year ago. Investments in new initiatives, digital entertainment, and sports had a negative contribution of approximately Rs 140 crore to EBITDA, the company said in a statement.
The company’s consolidated net profit was Rs 9 crore compared to Rs 307 crore in the corresponding period of the last fiscal year.
“We are really pleased with the operating performance of the businesses. However, the tough macro environment made it challenging from the perspective of financial results,” Adil Zainulbhai, Network18’s Chairman, said in a statement.
Entertainment shines
The entertainment vertical consisting of Viacom18’s 38 channels, Voot, and AETN18’s two infotainment channels reported an 18 percent growth in operating revenues. Growth in Viacom18’s revenue was primarily driven by the movie and sports segments. Non-sports ad revenue declined due to the soft advertising demand and the impact of the withdrawal of Colors Rishtey from DD FreeDish, the company said.
This segment reported an operating EBITDA of Rs 5 crore because of an increase in operating costs, primarily in the sports and movie businesses.
Viacom18 took a big step towards scaling up its digital business with FIFA World Cup as more than 110 million viewers tuned in to watch the football spectacle on the JioCinema app. The World Cup final saw a peak concurrency of 12.1 million on JioCinema, the highest for a non-cricket sports event in India.
Viacom18 further expanded its sports portfolio with the addition of Women’s IPL, SA20, South Africa cricket, and Olympics 2024 rights. The company also said Colors strengthened its No. 2 position and significantly narrowed the gap for the No. 1 position in the Hindi GEC (general entertainment channel) segment, driven by its strong programming line-up, and the viewership share of the entertainment network increased by 50 bps to 10.5 percent in the non-news genre.
Soft advertising demand impacts TV news
In the TV news segment, revenues were down 8 percent from a year ago thanks to the fall in advertising sales. TV news ad inventory declined by 27 percent at the industry level due to the soft advertising demand as well as a drop in the news genre share as a percentage of the total viewership pie, the company said.
This vertical reported an operating EBITDA of Rs 6 crore, compared to Rs 89 crore a year ago, as operating costs rose 23 percent primarily driven by content cost and distribution initiatives.
“Our investment in the business has helped establish strong viewership positions across the market which will be instrumental in capturing growth when the demand for advertising bounces back,” the company said.
It added that the news network has shown continuous improvement across viewership metrics over the last nine months (since the resumption of BARC ratings) and had a market share of 11.4 percent, it added.
Weak macros impact digital
The digital segment too saw operating revenues fall 2 percent on-year to Rs 92 crore for Q3FY23 as brands pulled back on performance marketing campaigns in view of the subdued consumer demand.
At the same time, the network is ramping up its team across functions to increase editorial coverage and technology infrastructure, which contributed to more than two-thirds of the increase in operating costs, the firm said in a statement. Consequently, this segment reported an operating EBITDA loss of Rs 8 crore compared to a Rs 22 crore profit a year ago.
