Subscription business to remain strong, Ad business to recover, IPL an additional boost! Q1 results in line with expectations Sun TV's Q1 FY21 numbers came in line with our expectations as Ad revenues fell sharply by 66% yoy. This was due to Covid related lockdown and absence of original programming. On the other hand, subscription revenues maintained momentum. Also absence of IPL led to yoy fall, as the base year included 2.44 bn of IPL revenues. Profitability at the bottomline was impacted due to higher amortization expenses. Lower corporate Ad spending led to a steep drop in Ad revenues. Subscription revenues were up by 11.5% yoy as Cable TV revenues went up by 34.8% yoy while...

Sun TV's (SUTV) Q1FY21 was healthy led by 18/11% YoY/QoQ growth in subscription revenue. Outlook remains upbeat with guidance for double-digit subscription revenue growth in FY21/FY22. This is in spite of potential negative impact if any from NTO 2.0. We remain conservative in our estimates. Acceleration of investments in digital business from future-proofing perspective was key highlight. But, there had been disconnect and delays in intent and execution. Thus delivery would be crucial. Management expect to maintain FY20 PAT...

The Covid-19 led lockdown hit ad revenues, which fell sharply by 65.8% YoY. In the current quarter, ad revenues recovered partially and currently are at 75% of pre-Covid levels. Ad spends from FMCG, e-commerce, auto, consumer durables, pharma are seeing a pickup. Sun has reduced ad minutes to maintain ad rates and will increase it once normalcy returns. Also, original fiction programming across all languages resumed with better than pre-Covid viewership in Tamil market. The management indicated start of festive season and pent up demand will lead to recovery in ad revenues....

15 August 2020 Sun TV Network (SUNTV)s revenue fell by 45% YoY, weighed by a plunge in ad revenues and the absence of an IPL season, but partly cushioned by subscription revenue growth. EBITDA fell 39%, partly offset by no fresh content production cost and SG&A; cost rationalization. We revise our FY21/FY22E EBITDA by 9%/8% as we factor IPL earnings in FY21E, better subscription revenues, and the benefit of sharp cost rationalization. SUNTVs 1QFY21 revenues declined by 45% YoY to INR6b (in-line), largely due to the postponement of the IPL season, through which the company had generated INR2.4b in 1QFY20. EBITDA thus declined 39% YoY to INR4.2b (38% above our estimate), supported by a reduction in operating cost, and EBITDA margins expanded 670bp YoY to 68.7%. Net profit thus fell by 25% YoY to INR2.8b (51% beat); PAT margins were at 47%, supported by other income and lower opex.

28 June 2020 Slowdown in ad spend, a high base of movie revenues, and loss of IPL revenues have led to an overall drop in revenues and EBITDA, partially offset by strong growth in subscription revenues. Ad revenue is expected to drop 20% going ahead in FY21E, while subscription revenues would grow at 12% in FY21E. Revenues were lower by 17% YoY at INR7.3b (in-line), largely attributed to a fall in ad revenues by 15% YoY, a high base of movie revenues in the corresponding quarter, and nil revenues from IPL games (INR570m) as the season has been postponed on account of the COVID-19 crisis. EBITDA, thus, fell 17% YoY to INR5b (in-line), whereas EBITDA margins stood firm at 68.5% (flat YoY). Depreciation charges were higher due to high amortization charges for movie premiers; thus, PBT fell 25% YoY to INR3.2b. FY20 revenues/EBITDA fell 7%/13% YoY to INR34b/INR22b, and margins contracted by 430bps to 65.7%.

Ad revenue decline continues; recovery likely in FY22 The macroeconomic headwinds impacted ad revenues that fell sharply by 14.5% YoY. In the current quarter, ad revenue fell significantly in April during lockdown. While some rebound was witnessed in May & June, ad revenues are still at lower level. On the viewership front, all major channels extended their market share in the range of 7-10%. It benefitted from TV premiere of new movies. However, this did not result in better ad revenue generation. The management indicated a recovery in ad revenues is still one or two...

Bracing for washout FY21 but FY22 may be bumper Ad revenues to be hit hard by Covid-19 in FY21 Advertisement revenues of broadcasters have been under pressure in FY20 on account of macroeconomic challenges. Going into FY21, the Covid-19 impact is expected to result in a washout April, 2020 followed by a slow recovery and normalisation only by H2FY21 led by a benign base and gradual recovery in economy. April revenue hit will also be on account of a steep loss of market share of most GECs to Doordarshan that is now thriving...

Bracing for washout FY21 but FY22 may be bumper Ad revenues to be hit hard by Covid-19 in FY21 Advertisement revenues of broadcasters have been under pressure in FY20 on account of macroeconomic challenges. Going into FY21, the Covid-19 impact is expected to result in a washout April, 2020 followed by a slow recovery and normalisation only by H2FY21 led by a benign base and gradual recovery in economy. April revenue hit will also be on account of a steep loss of market share of most GECs to Doordarshan that is now thriving...

Ad revenues witness decline; expect recovery in H2FY21 Macroeconomic headwinds impacted ad revenues that fell sharply by 10.7% YoY (in line with industry). We highlight the management sounded cautious in term of outlook and indicated that recovery would be seen by Q2FY21, Q3FY21. Among positives, the flagship Tamil channel has gained ~5-6 percentage points' market share gain in last seven to eight months to 47% currently. The company expects benefits of the same to kick in with a lag. Going ahead, given the challenging macroeconomic environment, we factor...

15 February 2020 Slowing ad spends and a high base for movie revenue led to a decline in revenue and EBITDA. OTT segment profitability though was comforting. Economic weakness has slowed down ad spends and the TRAIs latest bouquet norms bring in uncertainty over subscription revenue growth. Revenue declined 10% YoY to INR8.1b (16% miss) in 3QFY20, majorly due to falling ad revenue (-12% YoY). Also, the base effect came into play as the year-ago period had high revenue of INR1b from blockbuster movie distribution, which declined to INR150m in 3QFY20. Production cost was down 10% YoY which led to flat opex and provided some cushion to EBITDA (-13% YoY to INR5.8b; 13% miss). Excluding the base effect, overall revenue was up 1.5% YoY in 3QFY20, PBT would have been higher by INR135m and PAT growth was 12% YoY. Nxt subscribers stood at 15m, and the OTT segment has turned profitable.

New Tariff Order to keep Subscription revenues buoyant along with digitization Sun's subscription revenues are growing at a strong pace of >20% as digitization wave with the New Tariff Order (NTO) tailwinds are impacting the business positively. Digitization is also proliferating with momentum in TN with market conditions easing over there. Although its ARPU has declined in the past quarter, its stable now leading the DTH business to grow at a decent rate of 5-10%. Management...

Sun TV reported a weak set of numbers with a challenging economic environment, increased costs (including some one-offs) weighing on topline and EBITDA. Advertisement revenues at | 337 crore, down 1.5% YoY were impacted by a weak economic environment. Subscription revenues, however, witnessed robust 16.9% YoY growth aided by strong monetisation from NTO implementations. EBITDA at | 469 crore (margin of 58.9%) was lower than estimates of | 526 crore on account of certain one-offs related to CSR and bad debt provisioning aggregating to | 33 crore and continued...

1HFY20 revenue/EBITDA grew (a) Subscription revenue should reach INR4,200-4,300m quarterly run-rate by 4QFY20, with INR1b digital revenues and 20m OTT subscribers from 11m currently. Also, content cost should remain high due to spends on OTT, the Bangla channel and increased spends to protect market share in We have cut TP to INR525 (v/s INR600 earlier) based on the cut in estimates, valuing it at 13x P/E on FY21E EPS of INR40. Broadcasting revenues were down by 53% YoY to INR80m International subscription revenues were down 15% YoY to INR410m Domestic cable revenues grew strongly by 40% to INR1.7b on account of DTH revenues grew by 4% YoY to INR2.3b Revenues from films stood at INR123m during the quarter Production expense rose by 96% YoY to INR1.7b on account of new launches in Bangla and high cost fiction program launches. Expect to make subscription revenue of INR1,000m on investment of INR1,500m Sun TV is confident of maintaining/increasing market share across languages.

Weak ad growth; cautious outlook in near term The quarter was marked by weakness across the key segment of advertisers owing to macroeconomic headwinds. The management also sounded cautious in term of outlook and indicated that it expects mid-single digit growth in FY20, at best. In terms of market share, the company has gained 2-3% market share gains from the bottom in Q4FY19 due to NTO in key genre of Tamil and is looking to maintain aggressive content spend to wrest back some more market share. Going ahead, we factor in 7.5% CAGR in TV...

Strong subscription overshadowed by weak ad growth: Revenue declined 2% YoY (7% miss) in 1QFY20, as strong subscription revenue growth (+28% YoY to INR4.0b) was overshadowed by flattish ad revenue (+2% YoY) amidst a weak ad market. The impact was accentuated by early accrual of partial IPL revenue in 4QFY19, leading to lower contribution in 1QFY20. EBITDA too was down by 7% YoY (9% miss), as content cost (accounted in operating cost) doubled YoY owing to the new Bangla channel launch and the recent...

NTO impacts ad revenues; cautious outlook in near term The company indicated that advertisement revenues were impacted as key advertisers had pulled down ad volumes ahead of NTO implementation led uncertainty while there was also some ad shifting from GEC to sports genre due to IPL. The management sounded cautious in terms of outlook in the near term and guided for ad growth recovery from H2FY20 onwards. We highlight that the company has not seen an improvement in market share in key genres of Tamil, Telugu and Kannada and is looking to launch fictional...

grew 16% YoY to INR6.1b (3% beat); margins, however, contracted 440bp YoY to 68.4% impacted by high production cost and IPL related increase in SG&A.; But, movie amortization cost pulled down PAT to INR2.8b, -2% YoY (23% miss). For FY19, revenue/EBITDA/PAT grew 28%/31%/28%. Concall highlights: (1) FY20 subscription revenue should grow at 14-15%. (2) Expect 1HFY20 ad growth to remain under pressure due to viewership impact from TRAI's New Tariff Order. (3) Currently, ~38% homes in Tamil...

Sun TV's Q3FY19 performance was strong on the topline front but margins were lower on account of commissioning of news shows Revenues came in at | 904.45 crore (up 32% YoY). Ad revenues were up 13% YoY at | 382 crore, better than our estimate of 10% YoY growth. Subscription revenues were at | 350 crore (24.1% YoY growth vs. estimated growth of 21.5% YoY). The company booked Sarkar movie theatrical revenues of ~| 108 crore, during the quarter EBITDA came in at | 667 crore, up 35.6% YoY. EBITDA margin was...

as well as Advertising revenues grew strongly at 24% and 13% yoy respectively. Management highlighted that despite dip in market share in Q3, there has been a good revival in January. Cable TV revenues grew 24.3% on new tariff regime implementation, while DTH revenues grew by 24.1% pulling up the overall domestic Subscription revenues by 24.2% yoy. Also the continued process of...

Revenues came in at | 749.6 crore (up 10.9% YoY), lower than our estimate of | 763 crore. The miss was owing to advertisement revenues, which witnessed 3.7% YoY growth vs. our estimate of 14% YoY growth). Subscription revenues came in at | 339.79 crore (21.3% YoY growth), much ahead of our estimate of 15.3% YoY growth, on account of continued benefits of Tamil Nadu digitisation EBITDA came in at | 554.3 crore, up 11.7% YoY, marginally below our expectations of | 561.4 crore largely owing to lower topline. Margins...