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HT Media net profits up 113% YoY even though ad revenues continue to decline

HT Media reported net profits of Rs 66 crore despite a decline in advertising revenue for the quarter ended September 30, 2017 (Q2 FY18), up 113% from Rs 31 crore in the same quarter last year, and up 58.8% from Rs 41.55 crore in the previous quarter. The decline in ad revenue did, however, have an impact on operating revenues for the quarter, which declined 7% on a year-on-year (YoY) basis to Rs 561 crore from Rs 602 crore.

This oddity – significant increase in net profit despite decline in ad revenue – is partly because the company continues to reduce its expenses every quarter. In Q2 FY18, total expenses stood at Rs 507.6 crore, as compared to Rs 606.7 crore in the same quarter last year and Rs 570.5 crore in the previous quarter. The reduction in overall expenses also includes cutbacks on ‘Employee benefits expense’, which stood at Rs 121.8 crore for the quarter, as opposed to Rs 152.7 crore spent in Q2 FY17 and Rs 131.2 crore spent in Q1 FY18.

Earlier this year, HT Media had an unknown number of layoffs and pulled shutters on four editions and three bureaus, including its business bureau in Mumbai and Delhi.

Note that HT Media’s chairperson and editorial director, Shobhana Bhartia said that “Advertising revenue growth continues to be a challenge in our core Print business, with this quarter witnessing high level of uncertainty across industries on account of GST implementation. Our radio business continues to do well. New radio stations are generating revenue and the entire radio business witnessed an increase in operating profits. While advertising revenue in print has been soft, operating profits continue to grow steadily on the back of strong cost management and aided by favourable currency and commodity rates. GST is expected to stabilize soon which should lead to better macroeconomic environment and result in higher advertising spends.”

Digital segment

Digital revenues also declined marginally to Rs 33.7 crore from Rs 37.2 crore in the same quarter last year. While on a sequential basis, the decline was steeper: digital revenues in the previous quarter stood at Rs 41.82 crore. The segment posted a loss of 11.62 crore, as compared to a loss of 12.8 crore in Q2 FY17 and a loss of Rs 12.1 crore in Q1 FY18.

The company didn’t provide further financial details for the digital segment, but did mention that:

  • Despite overall decline in revenue, digital content business continues to grow.
  • Page views showing good traction versus last year across digital properties.
  • Shine revenues have been soft.
  • Restructuring in mobile and HT Campus business also impacted revenue performance.

Print segment

Though the print business still accounts for majority of HT Media’s revenues, in Q2 FY18 revenue for the segment stood at Rs 495 crore, down 6% from Rs 526 crore in the same quarter last year and Rs 517 crore in the previous quarter. Of this advertising revenue accounted for close to 80% or Rs 395 crore. Ad revenue in the same quarter last year had stood at Rs 430 crore.

The segment posted a profit of Rs 104.8 crore for the quarter, which is more than double the Rs 46.7 crore profit reported in Q2 FY17, and a significant increase from the Rs 86.1 crore profit posted in the previous quarter.

Multimedia Content Management segment

The segment posted revenue of Rs 44.5 crore, marginally down from the Rs 47.3 crore revenue reported in the last quarter. The segment posted a profit of Rs 85 lakh, as compared to a loss of Rs 29 lakh in the previous quarter.

Note that HT Media had transferred the Multimedia Content Management business to HT Digital Streams Limited last year, which came into effect from March 31, 2016.

Investments made in Q2 FY18

  • The company invested Rs 1 lakh in equity shares of HT Digital Ventures Limited.
  • It invested Rs 2 crore in equity shares of HT Music and Entertainment Company Limited.

The share allotments have not been completed yet.

Note that on August 25, 2017, HT Media’s board approved the demerger of the Entertainment & Digital Innovation business of the company and the vesting of it to its wholly owned subsidiary HT Digital Ventures Limited. The deal is waiting for approval from shareholders and the National Company Law Tribunal.

Download: PresentationFinancials

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