Ebitda ((earnings before interest, taxation, depreciation and amortisation) margin improved 180bp year on year (YoY) to 73.8 per cent despite programming cost growing by 51 per cent YoY, which was offset by the positive impact of operating efficiency.
“Advertising revenue grew 13 per cent YoY to Rs 380 crore despite lower viewership share in the Tamil genre QoQ, as growth was supported by improved viewership share in the Kannada and Telugu genre. Domestic subscription revenue surged 24 per cent YoY to Rs 340 crore, led by digitization in Tamil Nadu; Sun continues to report above industry average growth on the subscriber revenue front, which has had a positive impact on overall profitability,” analysts at Elara Capital said in a quarterly update.
We believe the ad segment may be able to report growth in line with industry average (10-12 per cent YoY) in FY20, supported by the new Bangla channel and improved market share in other genres (Telugu & Kannada); however, Sun TV - the flagship channel - continues to be a drag and has still not shown any visible signs of improved viewership share despite the launch of new shows recently; further, Sun Life, the new GEC offering, too has failed to grab eyeballs or impact ad growth on the positive, it added.
Management has plans to revamp the digital team (Sun NXT) with new hires and plans to make original content; however, execution would remain key. The launch of Marathi channel is further delayed to end-FY20, which too shows the resistance of the Sun Group to move beyond South India at a faster pace, the brokerage firm said.
At 01:42 pm; Sun TV Network was up 10 per cent at Rs 575 on the BSE, as compared to 0.43 per cent decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 9.74 million equity shares changed hands on the NSE and BSE so far.
In the past three months, the stock had underperformed the market by falling 16 per cent against 4 per cent rise in the benchmark index till Friday.