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DTH releases not a viable alternative at present: Cinemax

In an interview with CNBC-TV18, Jitendra Mehta, CFO of Cinemax spoke about the results and his outlook for the company. Here is a verbatim transcript of the exclusive interview with Jitendra Mehta on CNBC-TV18. Also watch the accompanying video.

Q: Run us through the numbers you said your revenues are Rs 47 crore versus Rs 45 crore but your net profit is down to Rs 2.5 crore compared to Rs 4.5 crore. What went wrong?

A: Nothing much went wrong. Definitely there were some after effects of the strike, which was during the month of April and June. So by the time the films got released, in the month of July, it was a little late. Then there were some closures also in Hyderabad where Our properties were closed for two-three days due to the sudden demise of the Chief Minister. And theatres were closed for two-three days because of swine flu. And in September as well there were not good releases.

So the growth is Rs 47 crore. But after reducing entertainment tax it comes to Rs 42 crore vis-à-vis Rs 45 crore in the comparable quarter in the last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) has been maintained at around 19% and profit after tax (PAT) has gone down to 6%. Also a major reason for a little fall in the profit is that distributors have shared their risk with us due to that strike. There is a fall of 3-4% of EBITDA because of additional distributor share, which was a result of the strike.

Q: There has been another issue that may become an issue going forward in terms of direct-to-home (DTH) releases right now. We have already seen one movie that’s come out with those releases. What has been your dialogue with producers? What is going to be the outcome of this because this would definitely impact your initial day sales?

A: I understand the seriousness of DTH. But so far that experience of Main aur Mrs Khanna is not so good as far as the DTH release is concerned because the figures are very dismal. But I do understand the total statistics because I understand there are 1.6 million connections of DTH and presuming that 10-15% go for that movie on demand and just pay Rs 100, still the figure works out to Rs 15-20 crore. Today when good movies are made for Rs 40-80 crore, DTH probably as on today does not seem to be a viable alternative to start from day one. So movies have to be released in theatres. Maybe after a week or two or three weeks, it can definitely be released on DTH. Otherwise I don’t think that economic will work out.

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