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Reliance Industries Ltd. - Company Analysis (Part-3)



3) Media and Entertainment



Under Media and Entertainment segment Reliance has 17 TV channels, Voot as a Digital Entertainment platform, 4 Digital News platforms including moneycontrol, CNBC TV 18, 4 Publishing Business Partners in the magazine, has Book My Show as a Digital Commerce Platform, has Viacom 18 Studios & Jio Studios under Filmed Entertainment platform and IndiaCast as Content Asset Monetisation platform.

The company claims 1 in every 2 Indians is a consumer of the company's broadcast content. One in every four internet users in India is on Network18 websites or apps. The company receives a huge number of traffic every month in the digital platform as well as a broadcasting platform, 

Company's subsidiary TV18 with a 10.5% share of news viewership in FY20. Its subsidiary Viacom18 is on the 3rd pan - India entertainment broadcaster with a 9.5% entertainment viewership share in FY20.

20 domestic TV News channels in 15 languages and Digital News is available in 13 languages. Full portfolio entertainment offering includes 9 regional language TV channels, a film studio renowned for clutter-breaking cinema, and a leading OTT platform.

Network18 has a track record of building successful strategic alliances with international media companies such as Viacom in entertainment, CNN in English general news and CNBC in business news, A+E Networks in factual entertainment, and Forbes in the business magazine genre.

The Indian media and entertainment sector grew at a modest 9% in CY 2019. This was led by a weaker macroeconomic scenario dragging advertising revenue, even as a pivot towards B2C/B2B2C models of outreach and monetization boosted subscription revenue, offering some respite. TV grew just 6% led by the TRAI New Tariff Order (NTO) impact, and Print continues to see a slow but largely secular decline, while Digital (+31% y-o-y growth) has driven growth for the overall sector. Digital has rapidly gained scale (>12% of the media and entertainment pie in CY 2019, slated to outpace Print by CY 2022); and remained resilient led by the promise of targeted advertising and exponential subscription growth.

The first half of the fiscal had multiple major sporting events (IPL, Cricket, and Football World Cups), which saw viewership and ad-spends gravitating towards the highly concentrated sports genre, and away from the broad-based general entertainment genre. The national elections in May 2019 also boosted ad-spends on news channels during that period, and government/ political ad-spends contracted sharply post the same. A relatively benign festive season was the result of the absence of some major advertisers in sectors such as Auto, Handsets, Telcos, among others from the roster. As economic activity further slowed towards the second half and the COVID-19 pandemic surfaced in Q4, a consequent sharp fall in advertising continued to impact broadcasters’ ad revenues.

Advertisers have gained comfort with the Digital medium and raised their share of spends on Digital across the board. The share of non-English language content consumption has risen to 93% (37% in non-Hindi), which has resulted in 65%+ ads being in regional languages. Share of programmatic advertising and native advertising continues to jump. 

• MoneyControl (MC) Pro: MC Pro, the behind-paywall offering from the leading finance portal in the country, received a great response from consumers. By the end of the fiscal, it had scaled up to 1.5 lakh paying customers, which signals both strong demand for premium financial news and tools and an increasing willingness to pay. 

• VOOT Select: Voot Select, the freemium entertainment offering, was launched in March 2020 with live channels, digital-first broadcast content, and a discerning library of original content that has received audience acclaim. It aims to build upon the strength of the brand and the engagement levels the existing ad-driven model has enjoyed. 

• Voot Kids: This Kids edutainment product was also launched during the year. It is a niche, differentiated product with Watch-Play-Learn- Listen to capabilities.

Future prospective company's business TV Broadcasting Business can see downfalls slowly as digital platforms like Netflix, Amazon Prime Video, Voot(a Reliance-owned digital services platform), etc. are growing very fast as India being the world's fastest-growing platform. OTT platforms are growing at a robust rate of 10.1% annually and are expected to reach $55 Billion by 2024 in India. Overall though, global Media & Entertainment revenues will contract by 5.6% in 2020 over 2019. OTT platforms' growth can be a big hindrance to the growth of the company's TV Broadcasting Business and focusing the point that company's major revenue TV Broadcasting.


Financials

The company's Revenue in FY 2018 - 19 was 5,116 crore and in FY 2019 - 20 company's revenue grew to ₹5,357 crores seeing a 4.7% change on a y-o-y basis.

The company's EBITDA in FY 2018 - 19 was ₹212 crore and in FY 2019 - 20 company's revenue grew to ₹616 crores seeing a 191%(almost 3 times) change on a y-o-y basis.

The company's EBIT in FY 2018 - 19 was -52 crore and in FY 2019 - 20 company's revenue grew to ₹351 crores seeing a 775%(more than 8 times) change on a y-o-y basis.

The company's Margin in FY 2018 - 19 was -1.0% crore and in FY 2019 - 20 company's margin grew to 6.6% which indicates that the company's strategy to increase margin and increase profits.


Read More:

Reliance Industries Ltd. - Company Analysis (Part-1)

Reliance Industries Ltd. - Company Analysis (Part-2)

Reliance Industries Ltd. - Company Analysis (Part-3)

Reliance Industries Ltd. - Company Analysis (Part-4)

Reliance Industries Ltd. - Company Analysis (Part-5)

Reliance Industries Ltd. - Company Analysis (Part-6)

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