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Network 18 loss widens, revenue rises

Network 18 loss widens, revenue rises

Mumbai: Network 18 Media and Investments Ltd’s net loss widened almost four-fold in the three months ended 31 March from a year earlier against the backdrop of slowing economic growth, which is taking its toll on the media industry’s advertising revenue.

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For the full year to 31 March, the net loss was 388.5 crore, compared with a loss of 36.68 crore in the previous year. Revenue rose 31.5% to 1,952 crore.

Its news and entertainment television business posted a 16% increase in revenue to 348.7 crore in the quarter. Digital content and e-commerce business revenue grew 37% to 67.1 crore.

“FY12 was a truly transformational year for Network 18," said managing director Raghav Bahl in a statement. “We announced the proposed strategic stake acquisition in ETV Network and a plan to induct significant equity in the group. These plans when consummated (subject to regulatory approvals) will catapult us into the forefront of the Indian media industry with a debt-free balance sheet and a fully built-out television and digital footprint."

In January, Mukesh Ambani’s Reliance Industries Ltd (RIL) announced an investment in the Network 18 Group. RIL, through a newly created vehicle called Independent Media Trust, is infusing funds in the form of loans (or optionally convertible debentures) into Network 18 Media and Investments, the group’s holding company, and TV18 Broadcast Ltd, the flagship firm.

Network 18 and RIL announced two rights issues of up to 2,700 crore each. Since Network 18 Media is the promoter and a majority shareholder in TV18, it will subscribe to around 1,400 crore worth of shares in TV18’s rights issues. Consequently, the net rights issues of both the companies will amount to a fund raising of 4,000 crore. RIL will provide funds to promoters to pick up their tabs in the two issues and of the other shareholders as well in case they decide to stay away from the fund raising. RIL is also divesting a majority of its stake in Eenadu Group’s various broadcast channels to the Network18 Group.

“We expect near- to medium-term softness on the advertising front but are confident of delivering a strong operating performance," said Network 18 group chief executive B. Sai Kumar.

Network 18’s stock on Wednesday closed at 36.20 on BSE, down 1.23%, while the Sensex fell 0.40% to 16,479.58.

TV18 Broadcast, a subsidiary of Network 18, posted a net loss of 8.26 crore in the quarter, compared with a net loss of 11.37 crore in the corresponding quarter last year. Revenue rose to 192 crore from 68.8 crore. For the full year, the company posted a net profit of 9.24 crore against a net loss of 49.24 crore in the previous fiscal. Full-year revenue rose to 626.10 crore from 244.41 crore.

TV18’s stock closed at 25.40, up nearly 1%.

“I’m concerned with regards the group’s lack of fiscal discipline and corporate governance standards," said Nikhil Vora, managing director of IDFC Securities Ltd. "Operationally too, I believe that they will be challenged to change track."

aminah.sheikh@livemint.com

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