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| PVR: Box office blues |
| Shobhana Subramanian / Mumbai Sep 17, 2009, 00:06 IST |
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The June 2009 quarter was expected to be a difficult one for multiplex operator PVR because of the dispute between film distributors and multiplex operators and virtually no films being released for nearly three months. So it wasn’t surprising that PVR, which will be operating 150 screens by the end of the year, reported a fall in revenues of 44 per cent.
 That resulted in a loss at the operating level of Rs 8.9 crore and an even higher net loss of Rs 10.9 crore, taking the consolidated loss to Rs 12.8 crore. Occupancies should have picked up in July and August, after dropping 17 per cent in the June 2009 quarter, from 32 per cent in the comparable period of 2008-09. That should improve the profitability of the business which has also been hurt because of some start-up losses incurred on new properties.
According to analysts, even though it may have been the protracted negotiations between distributors and exhibitors that disrupted PVR’s operations in the June quarter, the multiplex industry continues to run the risk of not being able to always access enough film content. In fact, the line-up of films in the March 2009 quarter too was unexciting, and according to industry watchers, 2010 will have very few big releases.
Since PVR commands a 10-12 share of box office collections, has diversified into other forms of entertainment and also produces some content, the business model is, to some extent, de-risked. Nevertheless, risks relating to the film business remain high; PVR Pictures, a subsidiary that produces films, posted an operating loss last year with profits from one film being eroded by losses on others.
Net profits last year were down nearly 60 per cent, though revenues rose a good 32 per cent to Rs 352 crore. In the current year, profits are expected to remain virtually flat, thought they could see a big jump in 2010-11 on a low base. At the current price of Rs 131, the stock trades at an expensive 22 times 2009-10 estimated earnings, but a far more reasonable 12 times 2010-11 earnings.
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