NDTV - Runs on Cash Burn ?

NDTV Ltd (NDTV) declared Q2FY’09E standalone financial results and a snap shot is for your swift and immediate consumption :

• Stand alone Revenues of INR 739 MM (9% YoY) and EBITDA loss of INR 124 MM vis-a-vis EBITDA profit of INR 2 MM in Q2FY08.Adjusted net loss of INR 130 MM (vs. loss of Rs 40mn in Q2FY08). Losses were due to higher selling & marketing expenses, primarily carriage fees.


• NDTV recorded consolidated revenues of INR1.2 billion (68% YoY due to NDTV Imagine’s launch in Jan 08). Consolidated EBITDA loss of INR 1.1bn (loss of INR 192 MM in Q2 FYE'08) and adjusted PAT loss of INR 1.2bn (loss of INR 243 MM in Q2FY08).
  

You must be wondering why shanta (yours humbly) has picked up NDTV financials to blog. The reason being that I had been a ardent follower of Pranay Roy from the days of India This week which was produced by the same company to Doordarshan. He then managed to gain momentum through reporting Budgets, General election results and there by established the credentials of his NDTV. Given the boom in Television Industry, the soft launch of NDTV was done. However, on the financials front NDTV has been burning cash to run the channel as visible in the consolidated financials especially as the loss of operations equals the top line for the quarter. Thats a worrying sign not just because of the loss but becuase the net worth is getting eroded.

However, the silver lining for the NDTV is the growing TRPs of NDTV imagine and other triggers from the NDTV network. The challenges have been on a upswing which include:

• Rev growth in the core news business is stunted (9% YoY) by high clutter in the Hindi general news and English business news genres. This is compounded by the macro slowdown in ad spends.
• A slew of new launches across TV genres has led to a significant rise in carriage fees (↑105% YoY). Higher personnel costs (↑27% YoY) owing to increased headcount and competitive pressures also contributed to NDTV’s losses.

NDTV Networks update :

• NDTV Imagine has been successful with Ramayan, which is among the top 100 shows. However, while the channel is now stagnating at ~80 GRPs, the newly launched Colors has successfully made a bid for leadership in the GEC space
  
• In August 2008, NDTV Imagine launched Imagine Showbiz, a 24-hour Bollywood business and entertainment channel, under a JV between NDTV Imagine Ltd. and Cinestar Advertising Pvt. Ltd.
  
• NDTV Imagine Films is developing and producing various scripts
  
• NDTV Good Times has maintained its No 1 position in the lifestyle genre
  
• NGEN Media Services, the Media Process Outsourcing venture, has seen clients transitioning from the pilot stage to regular contracts
  
• NDTV Imagine has also soft launched its world cinema channel, NDTV Lumiere on 10 October 2008

Lets hope Prannoy Roy and team do well and my personal opinion is the same is possible only on account of some Brave & stern decisions from the core management team.



From, the investment perspective I do not see any triggers to enter the stock and for the existing investors just HOLD on.





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