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HT Media net profits up 36% YoY even though ad revenues continue to decline

HT Media reported a net profit of Rs 124 crore despite muted advertising revenue for the quarter ended December 31, 2017 (Q3 FY18), up 36% from Rs 91 crore in the same quarter last year, and up 87% from Rs 66 crore in the previous quarter. The decline in ad revenue did, however, have an impact on operating revenues for the quarter, which declined 4% on a year-on-year (YoY) basis to Rs 625 crore from Rs 650 crore.

This significant increase in net profit is partly because the company continues to reduce its expenses every quarter. In Q3 FY18, total expenses stood at Rs 541 crore, as compared to Rs 595 crore in the same quarter last year. The reduction in overall expenses also includes cutbacks on ‘Employee benefits expense’, which stood at Rs 130 crore for the quarter, as opposed to Rs 145 crore spent in Q3 FY17 and Rs 122 crore spent in Q2 FY18. The company also attributes the increase in profit to sale of property of Rs 31 crore, and calls it ‘one time benefit from profit’.

Note that the previous year was tumultuous for HT Media as it pulled shutters on four editions and three bureaus, including its business bureau in Mumbai and Delhi, laying off an unknown number of journalists. Many estimate that 150 journalists were forced to resign from the company. However, in November, it said that it is done with its ‘cost-optimization’ in its print editions.

HT Media’s chairperson and editorial director, Shobhana Bhartia said in a statement that the “cost rationalization initiative we undertook last year continues to deliver good results with benefits visible across all cost items.” She added that there are some signs of an upcoming recovery as evidenced by advertising revenue picking up in the second half of the quarter. “With the teething issues around GST resolved, we expect growth in the coming financial year,” Bhartia said.

New listed entity and Multimedia Content Management segment

The segment posted revenue of Rs 18.5 crore, a steep decline from Rs 150 crore in the last quarter. The segment posted a profit of Rs 1 crore as compared to the profit of Rs 25 crore 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.

Last quarter, during the analyst call, the company mentioned that it will be creating a new entity called Hindustan Times Digital Ventures Limited (HTDVL) which will be demerged and from HT Media and get listed on the stock exchange. HTDVL will have HT Digital Streams Limited (HTDSL) and other group properties and digital innovation businesses.

The management also said that this was being done to “shield investors” from digital. Note that most of the digital businesses which are being hived into HTDVL are loss-making.

Digital segment

Digital revenues also declined by 24% with Rs 28 crore from Rs 37 crore in the same quarter last year. On a sequential basis, the decline was 18% as the digital revenues in the previous quarter stood at Rs 34 crore. The segment posted a loss of Rs 10 crore, as compared to a loss of 6 crore in Q3 FY17 and a loss of Rs 12 crore in Q2 FY18.

The job portal Shine, HT Campus and Digital Quotient businesses will continue to stay in HT Media as subsidiaries.

Print segment

Though the print business still accounts for majority of HT Media’s revenues, in Q3 FY18 revenue for the segment stood at Rs 529 crore, down 6% from Rs 561 crore in the same quarter last year and Rs 495 crore in the previous quarter. Of this advertising revenue accounted for close to Rs 452 crore, representing a marginal decline of 3% from Rs 456 crore in the same quarter last year.

The segment posted a profit of Rs 115 crore for the quarter, which is almost double of Rs 65 crore profit reported in Q3 FY17, and marginal increase from the Rs 105 crore profit posted in the previous quarter.

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