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See strong growth in international revenues ahead: Sun TV
Sun TV Network has declared its financial year 2009-10 results. It has reported consolidated net profit of Rs 520 crore as against Rs 368 crore, a growth of 41.3%.

Its consolidated net sales jumped 39.85% to Rs 1,453 crore from Rs 1,039 crore.

In an exclusive interview with CNBC-TV18, Ajay Vidyasagar, COO, Sun TV Network, speaks about the results and his outlook for the company.

He says, "We do believe our international revenues will see a very strong growth in the year to come and the year after that."

Here is a verbatim transcript of the exclusive interview with Ajay Vidyasagar on CNBC-TV18. Also watch the accompanying video.

Q: You have beaten estimates by far, what would you attribute the reasons for this? If you were to look at the next couple of quarters, how are you looking at it?

A: We are very pleased with the numbers that we have posted. The top-line grew 38% year on year. We have seen a very robust contribution from our advertising revenue growth, which on a year on year basis was at a 38%. We also saw 60% revenue growth on our subscriber revenues and hugely contributed by DTH revenue growth, which grew over at a 117%. So it has been a very good set of numbers, something that we have managed to deliver in excess of what the market expected.

We do hope to keep the momentum. We do believe that the advertising revenue market is responding to our products. We have a very strong leadership in the four South Indian states and we do believe the advertiser commitment to us will continue to be very-very solid. Primarily because we are able to deliver strong solutions to advertisers who want to reach their viewers who want to reach their own customers who happen to be our viewers. So it is a very pleasing position we are in.

Q: What was the ad rate hike which you took in Q3 and what was the volume growth that you saw as well in Q4?

A: Q4 saw a 61% growth in ad revenues. I would not attribute a lot of that revenue growth to our new rates. Our rates kicked in from January 1, 2010 like every new rate, rate hikes take a certain amount of time in the region of four-six weeks for it to actually kick into the market, which actually happened for us too. I would say that a lot of the revenue growth happened on the back of a very strong selling approach that we put in place, where we managed to drive a lot of our inventory to be off taken across parts on our channels in the four markets. Some of our big products both in the friction and the non friction pack, which had deals that were going on from the previous quarter, so we managed to retain the momentum, we managed to deliver strong numbers in terms of viewership in all of these shows. That has added to the overall volumes.

Q: Coming to your subscription revenues, you have seen phenomenal growth in DTH, what about analog and international revenues?

A: Our DTH revenues grew 117% year on year. Overall subscriber revenues grew 60% year on year. Our analog revenue grew 20%. A lot of the market I heard in the north India talk about analog actually dropping down, but on the back of a very sustained discipline selling from our distribution team, we actually managed to grow our analog revenue by 20%.

We did grow by our international revenues too. We have actually put in a dedicated news sales unit for international revenues. We do believe our international revenues will see a very strong growth in the year to come and the year after that.

Q: Is this some sort of run rate we could expect in the ongoing quarters, this strong subscription growth that you have seen? Advertising growth, is this some sort of quarterly run rate we have seen of around Rs 390 crore, is this some sort of run rate we can see going forward as well for Sun TV?

A: Yes. We hope to retain the run rate. We will see some vagaries between different quarters. The festive season is a season when the momentum in advertising goes up much more than the other seasons. So starting September down till Christmas, you will see certain volume go up versus the other five-six months of the year.

Q: Your margins have come in at a stellar 84% in Q4. Analysts are wondering whether this can be sustainable going forward. So for Q4 specifically how did you actually your margin expansion of 84% versus a 79% on QoQ basis and what is it we can expect going forward?

A: That range of between the late seventies and early eighties is what we, as a company, strive to do. We know that it is astounding margin number and we will work hard to ensure that we manage to keep it to those levels. That is what we, as a collective group, the team at Sun TV will work towards achieving.

Q: How did your movie business do this quarter?

A: I think the movie business is to be seen not necessarily on a quarterly basis. The story is about the year that went by. We are focused on Tamil movies and the Tamil film industry saw a lot more buzz in this year that went by, thankfully due to some of the blockbuster hits that Sun Pictures delivered.

As an industry I think industry saw atleast five-six big hits and most of them were from Sun Pictures’ stable. It is something that is a great story and we are excited about the business and we will see a lot more action in the year going forward.

Q: What can we expect from the big blockbuster movie that was to come out in early this year and what is the update on that?

A: There is a lot of work going on on that. Like all of us know it is a very big production. It is slated for second half of this calendar year release and there will be separate announcement about that from our Sun Pictures team.

Q: With the investment still be around Rs 100 crore for the movie or has it actually increased since the last time you held a concall about this?

A: It is operating around that range and as I said the Sun Pictures’ team will surely do more detailed dedicated conversation about that a little later.

Q: Can you leave us with some guidance regarding your radio business?

A: The radio business is a business that we as a company are very excited about. We are one of India’s largest radio networks. The big news in the year that went by was that we managed to unify all of our radio stations under the unified Red FM brand, so every station outside the Tamil station are now part of Red FM. We are beginning to see the collective might of this is having a very positive impact on the overall performance of this business and that is something that we will bear fruit more effectively in this fiscal that is going forward.


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A phenomenal stable performance to achieve around 38% growth rate per annum.
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