Hard times fall on Indian channels,may suffer losses in Q3

Indian television broadcasters may post lower profits or a loss in October-December on poor advertisement revenues.

Written by Reuters | Mumbai | Published: January 20, 2009 6:08 pm

Indian television broadcasters may post lower profits or a loss in October-December on poor advertisement revenue and as higher costs due to the Mumbai terror attack coverage squeezed margins,analysts said.

IBN 18 Broadcast and Television Eighteen will post quarterly losses as their core news businesses fared poorly while TV Today,will show a marginal dip in Oct-Dec profit,a Reuters poll of analysts showed.

“Viewership was skewed towards news channels during the Mumbai terror attack but we don’t see any financial benefits,” Mihir Shah,an analyst with brokerage Prabhudas Lilladhar said.

“Advertisement revenue took a hit. There would be margin pressure due to the cost involved in the coverage,” he added.

Militants held two of Mumbai’s biggest luxury and business hotels hostage for nearly three days and television news channels in the country carried live coverage of the crisis throughout the hostage drama.

IBN 18 Broadcast runs and operates two news channels,CNN-INB and IBN7,while Television Eighteen,a unit of Network 18,runs business news channels CNBC TV18 and CNBC Awaaz and TV Today runs Hindi news channel Aaj Tak.

Aaj Tak,the most watched Hindi news channel during the Mumbai attack,received steady ad-revenue but the firm’s continued focus to expand its English news channel ‘Headlines Today’ led to higher expenditure,analysts said.

UTV Software Communications,which recently consolidated operations for four television channels – Bindass,Bindass Movies,UTV Movies and World Movies – will see net profit more-than-halve to 102 million rupees.

The firm had two successful small budget film releases – Oye Lucky Lucky Oye and Fashion – in the quarter but losses in the broadcasting business will hurt profits,a local analyst said.

Earlier,the firm had said loss in the broadcasting vertical for the third and fourth quarters of 2008/09 will not exceed 150 million rupees,while loss for 2009/10 was projected at up to 250 million.

Sun To Rise

South India-based television broadcaster Sun TV Network Ltd,which is forecast to post a 16.5 percent rise in net profit to 1.2 billion rupees,will report results on Jan. 27.

The firm,which is set to produce Rajnikant-starrer ‘Endhiran’,witnessed a steady growth in advertisement due to its regional presence,analysts said.

Faster roll-out of direct-to-home operations and fragmentation in general entertainment channels also helped improve its operating margins,they added.

Following are the median net profit/ (loss) and net sales estimates for television broadcasters for the quarter-ended December 2008,based on responses from 6 brokerages.

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