Network18 posts Rs 1,152-cr loss

Company has taken a one time hit of Rs 1,045 cr in exceptional items

Network18 Media Investment Ltd (which controls a host of broadcasting channels such as CNBC TV18, CNN IBN, CNBC Awaaz and Colors, apart from online e-commerce and news portals) reported a consolidated loss of Rs 1,152.8 crore for the quarter ended June, against a profit of Rs 21.1 crore in the corresponding period last year.

Adjustments by way of write-offs on loans and diminution in the company’s goodwill, as well as in some of its investments, led to the loss. The company’s operating loss, however, declined about half due to healthy growth in revenue.

The company, which announced its June quarter results under a new shareholder (Reliance Industries chief Mukesh Ambani), has taken a one-time hit of Rs 1,045.3 crore on exceptional items. This included write-off and provisions of non-recoverable and doubtful loans, advances and receivables to the extent of Rs 519.41 crores, diminution in the value of certain investments to the extent of Rs. 142.82 crores and goodwill Rs. 234.78 crores and obsolescence and impairment in the value of certain tangible and intangible assets to the extent of Rs. 127.43 crores. These particulars have been included as exceptional items in the P&L sheet along with Rs. 20.94 crores towards severance pay and consultancy charges.

The company explaining the logic of taking such a big hit said in its press release “The adjustments made by way of exceptional items to the P&L account for the quarter ended June 30, 2014, is based on a review of the carrying costs of the investments, current and non-current assets of the company.”However, the company also made it clear these adjustments will have no impact on the future operating profit and cash flows of the businesses of the group.

The company's loss at the operational level however came down from Rs 55.2 crore last year to Rs 25.1 crore in the first quarter of the current fiscal. This was driven mainly by 27% jump in operating revenues at Rs 708.4 crore against Rs 556.6 crore last year. Consequently, losses before tax, exceptional items and prior period items reduced by 37% from Rs 70.1 crores in Q1 FY14 to Rs 43.9 crores in Q1 FY15.

“Improvement in operating losses was owing to a strong growth delivered by the television operations; led by the entertainment and general news segments and a turnaround performance in the digital content business,” said the company.

In July, the Independent Media Trust (IMT), of which Reliance Industries Limited is the sole beneficiary, completed the acquisition of a controlling stake of the promoter group entities - from Raghav Bahl and Ritu Kapur on 7 July, 2014. Pursuant to such acquisition, Raghav Bahl, Ritu Kapur and other existing promoters / promoter groups of Network18 Media and Investments Ltd.