Sun TV Network held a conference call to discuss quarterly performance and future prospects of the company. Mr S Natrajhen, CFO addressed the call.
Highlights of the call
- For FY09, the Company would continue 20% + growth. For FY10, advertising growth could be 18-20%.
- The management to maintain OPM in 74-75% range going forward.
- On an approximate basis, of the revenues, advertising revenues are 52%, broadcasting revenues are 15%, foreign revenues (programme licensing) are 5% and 23% are subscription revenues including DTH. Movie production revenues were about 2.5-3%. In the corresponding quarter previous year its advertising revenue was 53-54%, broadcasting 14-15%, subscription revenue was 25% and overseas revenues was 5%.
- On y-o-y basis, advertising revenues grew about 22%, broadcasting revenues grew 24% and pay channel revenues grew 14%.
- The cost of production was up on account of production costs on movies produced and released.
- The Company has sold all slots for Q4FY09. Of the 24 hours: 25% is for private producers and 75% for in-house. For every 6 minutes for private producers: 4 minutes would be for private producers and 2 minutes for the Company.
- “Sun Direct” is the DTH arm of which promoters hold 80% and Astro Malaysia holds 20%. For Sun TV, the revenues come through pay channel revenues. The subscriber base has increased to 3.3 million at the end of December 2008 from 2.3 million at end September 2008. The ARPU is about Rs 26 per subscriber per month. The subscriber data from DTH players is received with 7-10 days from end of month and bill is raised for which payment is received with one week’s time.
- The Company has close to 1300 employees. Of the salary cost for 9MFY09 of Rs 75.76 crore about Rs 55 crore is salary to directors and balance for staff.
- For the Company, advertisers are FMCG companies and regional & local advertisers.
- Of the depreciation charge one-third is normal depreciation and two-third is amortization.
- Capex for FY09 includes movie acquisition of Rs 100-110 crore, fixed assets Rs 130 – 140 crore and movie production Rs 40-50 crore.
- Cash & Bank balance at the end of the quarter was Rs 336 crore. The balance at the end of March 2008 was about Rs 400 crore. The debt on books is Rs 6 crore. The cash outflows for the 9MFY09: dividend payment – Rs 115 crore, movie acquisition (satellite rights) Rs 80 crore, movie production Rs 20 crore, fixed assets Rs 100 crore and subsidiary funding Rs 55-60 crore.
- Regarding movie acquisition (satellite rights) – the Company amortizes the cost on the first run. For bid budget movies atleast 3-4 runs are required to recover costs and for others it is 2 runs. On an average it takes 2 years for a movie to recover costs.
- Generally, movie can be released on TV only after 2 years of release: Tamil Nadu – 2-3 years, Kannada – 2 years, Malayalam & Telugu – 1-2 years.
- The company was supposed to launch Kids Channel in other languages in December 2008. However, now the Company plans to launch atleast one Kids Channel by March 2009.
- The Company has plans to expand its reach to have a national presence. The Company would make an acquisition if it finds the right choice.
Sun Pictures
- During the third quarter, Sun Pictures, a division of Sun TV Network released 2 movies in Tamil language, viz., “Thenavattu” and “Dindigul Sarathy” which have done well in the theaters. Sun Pictures also announced that it is producing the movie titled “ENDHIRAN (The ROBOT)” with a star cast of Superstar Rajinikanth and Aishwarya Rai and directed by Shankar with Music by A R Rahman. The film scheduled to be released simultaneously in Tamil, Telugu, Hindi and other languages by the end of FY09.
- The Company has capex of about Rs 40-50 crore for production of medium and small budget movies. It has plans to produce about 9-10 movies.
- The Company has not put a cap on the maximum amount to be invested in film production. The Company has not finalized the budget on the big budget movie.
- The return on investment in movie production is about 20-25%.
Radio business
- Currently, the company has 42 stations operational and the balance 2 stations would be operational shortly. Of the 42 stations, 3 are in the parent company.
- The Radio business has seen a slowdown in Q3FY09. The radio business is getting hit and it will take longer time to recover. The management expects Radio business to breakeven in FY2011.
- Loss from radio business excluding minority interest was Rs 40 crore in FY08, which would increase to Rs 60-65 crore in FY09 and a similar amount in FY10. Revenues for FY09 would be about Rs 30-32 crore.