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NDTV Calls Off Scripps Deal; FY10 Results

Will NDTV’s 4 point plan for becoming cashflow positive need re-jigging? The BSE listed company has announced that it has decided to terminate its definitive agreements with Scripps Networks Interactive; Scripps’ acquisition of a 69 percent stake in NDTV Lifestyle, which runs the fashion and aspirational channel NDTV Good Times for $55 million, was expected to be closed in the last quarter. Note that while NDTV had earlier put the amount at $55 million, notes to its financial results for Q409 indicate that it was $35 million.

NDTV has said that it “decided to exercise its right to terminate the definitive agreements and is in the process of terminating them”, while Scripps announced that the two companies were unable to come to terms on specifics of the transaction, and discussions ended on Monday.

Following the announcement of the Scripps deal in November last year, in December, NDTV had sold off 92 percent stake in NDTV Imagine Ltd to Turner; the deal was completed on February 23rd 2010, and NDTV Imagine is now Turner General Entertainment Neworks India Ltd.

A part of the money from Scripps was to be used to pay holders of bonds that the company bought back for $72.4 million, but it appears the $126.5 million from Turner may have been enough for that purpose: According to notes to NDTVs FY10 results, during the year, NDTV Networks Plc repurchased the “US$ 100 Million Step up Coupon Bonds due 2012 for US$ 72.4 Million financed through bank loans. As a result, the undertaking given to provide a corporate guarantee by the Company to repay the 40% of the outstanding Bonds has ceased to exist.”

NDTV Results

NDTV reported Operating Income of Rs. 5722 million, Employee costs at 2240.7M and total expenditure of Rs. 8764.2, at a consolidated level, for the full year ending March 31st 2010. Net loss for the companywas Rs. 117.65 million. Since Turner bought NDTV Imagine during the year, and consolidated results do not include the results of operations of NDTV Imagine and its subsidiaries, results for the full year and fourth quarter are not comparable with previous years. Notes on NDTVs Standalone results:

NDTV Standalone: Q410
— Operating Income was flat: Rs. 782.8 million, compared to Rs. 789 million for the corresponding quarter the previous year. Remember that Q4 is usually a good quarter with the budget announcement, and last year, that was pushed to Q1-10.
— Employee costs and administration and operating expenses for the quarter were less than half of what they were in Q4 last year. Consequently, total expenditure for the quarter was Rs. 780.9 millon, almost half of Rs. 1438.3 million in Q4 last year.
— NDTV reported net loss for the quarter, at Rs. 46.3 million, compared to the Rs. 447.4 loss it had reported in the corresponding quarter last year.

NDTV Standalone: FY10
— Operating Income was up marginally, at Rs. 2990.7 million from Rs. 2815.4 million for the corresponding quarter the previous year.
— Employee costs (down to 806.8M from 1131.7M) and administration and operating expenses (down to 759.2M from Rs. 986.5 M) reduced significantly. Consequently, total expenditure for the year was Rs. 3053.4 millon, down from Rs. 3898.6 million during the previous year.
— NDTV reported net loss for the year at Rs. 205.2, compared to Rs. 731.8 million the year before

New Distribution Agreements during the year

During the year, NDTV signed a consultancy agreement with Malaysia’s Astro Awani Networks to offer operations and strategic management support to its channel Astro Awani, for a further period of 2 years. The company also signed a multi-year distribution agreement for all its channels with Comcast and Airtel DTH. Additionally, it signed a deal to power Airtel’s lifestyle interactive application, for NDTV Good Times, allowing users to watch specific fashion & lifestyle shows from NDTV Good Times through the app. NDTV 24×7 was also the first English news channel to launch the interactive News application on Airtel DTH.

NDTV also expanded its reach in Central Africa: Kenya, Uganda, Tanzania, Burundi, Congo, Eritrea, Ethiopia and Rwanda; it is already present in South Africa, Zimbabwe, Namibia, Angola, Botswana, Malawi, Mozambique, Swaziland and Zambia, with viewership in 50 countries.

Turner Buys 92% In NDTV Imagine For $126.5M
Scripps Networks Acquires NDTV Lifestyle For $55M
NDTV Networks CEO Vikram Chandra On The 4 Point Plan For Becoming Cash Flow Positive

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