HT Media Limited (533217) Earnings Call Transcript & Summary

Ladies and gentlemen, this is Aaditya Mulani from the HT Media Group. I would like to welcome you all to our Quarter 1 Financial Year 2024-'25 Earnings Webinar. [Operator Instructions]. I now hand over to Ms. Anna Abraham, CFO, Hindustan Media Ventures Limited and Head, Investor Relations, HT Media Group. Thank you, and over to you, Anna.

Thank you, Aaditya. Good afternoon, everyone. Thank you for joining the earnings webinar of the first quarter results of the company. Joining me for the call today is Mr. Piyush Gupta, Group CFO, Mr. Pervez Bajan, Group Controller and the Investor Relations team. The results of Hindustan Media Ventures Limited was announced yesterday, July 25, and those of HT Media Limited was released earlier today. We will during the course of this webinar discuss the results. Our comments during this webinar will follow the presentation slides. These slides and the financial statements are accessible on stock exchanges and on the Investor Relations page of our website. Before we proceed, I would like to bring to your attention the disclaimer related to forward-looking statements. Kindly keep this in line as we move during the course of the call. In line with our usual factors, we do not issue specific guidance on revenue or earnings. The current slide gives our Chairperson's comments on the performance of the company for the quarter and then growth. "Overall revenue saw a decline as compared to the same period last year as National elections and the enforcement of the model code of conduct impacted government advertising volumes in the quarter. But our focused efforts on cost management and operational efficiency helped mitigate the impact on profitability. Print advertising and circulation revenue saw a measured decline, affecting profitability; Radio posted growth in revenue over a year ago, but reported marginal losses; and the Digital business, however, saw considerable upside in revenue on a Y-o-Y as well as Q-o-Q basis and better sequential profitability, albeit with ongoing investments in OTTplay. The Company’s focus remains on improving profitability in core businesses by driving topline growth as well as on growing new digital businesses aided by measured investments in the medium term. At this juncture, our strong market presence across media platforms and robust liquidity position remain a source of strength and competitive advantage in the dynamic media landscape. Now more than ever, we remain committed to serving all our customers and stakeholders with integrity and transparency. Your continued support and trust are integral to our success. Our unwavering focus remains on providing credible and insightful news and engaging entertainment." The agenda today will cover the financial performance of the quarter, focusing on the consolidated financials and thereafter the business-wise results. After the presentation, we'll open for a Q&A session. With this, now I hand over the call to Mr. Piyush Gupta.

Thank you, Anna. Good afternoon, friends. We're tracking the presentation here. So first we will look at the consolidated financial summary. As you can see on our chart, overall revenue decline impacting profitability for the reported quarter. Company continues to maintain a robust net cash position. If you look at the number in the same period last year, revenues down by 4% at INR 427 crores. EBITDA is at INR 7 crores with a margin of 2%. PBT came at a negative 36% and net cash remained robust at INR 858 crores. Moving on. Now we look at the business unit performance. Coming into Print. Print segment operating revenue dipped for the quarter as both advertising and circulation saw decline. Operating profitability is near break-even, with benefit in newsprint cost offsetting impact of drop in revenue. If you look at the numbers on the Print, the revenues are down 10%, which I believe pointed out. It was primarily the impact of the model code of conduct in the first quarter. Circulation revenues were down marginally at INR 55 crores. Hence, operating revenues at about INR 299 crores with a break-even margin. A quick look at English, we saw government-led revenues decline in this quarter with key commercial sectors seeing a Y-o-Y growth and drop in circulation revenues on the back of lower copies. So on advertising revenue, it came at INR 117 crores versus INR 130 crores same period last year, which is a 10% decline and versus a sequential quarter that's a sharpish drop of 26% because in the previous quarter there was National election, there was model code of conduct impacting the quarter. On the right side of the chart, if we look at the circulation revenue, which came actually flat at about INR 15-odd crores. On a sequential basis, they go flat again at about INR 15-odd crores. Moving on to Hindi. The government-led revenue declined this quarter, whereas on the sequential basis, the sector seen a Y-o-Y growth on the commercial side. Circulation revenue dropped Y-oY and remained flat sequentially. If you look at the numbers, there's a 11% decline in the first quarter, was INR 102 crores on advertising revenue, whereas versus the immediately preceding quarter, that's a 24% decline. On the circulation revenue, it is a 10% decline and a flat number on a sequential basis. Moving on to Radio. For the reported quarter, there's a marginal Y-o-Y growth in operating revenue with operating EBITDA at break-even. If you look at the numbers, it's virtually flat at INR 36 crores with a break-even EBITDA. Moving on -- and on the Digital side, Digital revenue increase on an annual as well as sequential basis owing to the topline improvement in key businesses. Continuing loss on account of OTTplay, however, losses are lower than the sequential quarter. If you look at the numbers, operating revenue came at INR 47 crores, which is 31% jump with the operating EBITDA at a minus INR 25 crores. With this, we come to the end of the presentation and we would go for the questions and answers.

Thank you, Piyush. [Operator Instructions] First question is from the line of Mehul Pathak.

Yes. Can you hear me, sir?

Yes. Mehul we can.

Yes till you declared the results today. Okay. I have 2 questions. First one is related to both HT Media and Hindustan. DB Corp has come up with their results and declared a profit, which is higher by 49%. The top line is up close to 7%, 8%. There is an increase in advertisement revenue for them. Jagran and others have not come up with the results. Also, if you see Jagran has returned INR 1,660 crores to their shareholders in the last 4 years. So we are not in a sector where the sector is in distress. In 2018, our net worth was INR 2,550 crores. With today's results, it should have come down to below INR 1,650 crores. So INR 900 crores already lost. We are on our way, maybe in 10 years, net worth will get wiped out at this rate. So internally, is there any thought on when you will call a May Day. Mutual funds have already shipped out a long time ago. Many of us, die-hard shareholders of HT Media are hanging on. So I just wanted to know when will you call a May Day, when the net worth becomes INR 500 crores, INR 800 crores?

Yes. Mehul, so I wouldn't exactly characterize like that. I think the big difference between Bhaskar whose results are out, you're absolutely right. I mean, stellar set of numbers. I think you've been attending our call and you've been engaged with the company for a very long time. You absolutely understand that the company is creating businesses, which will create a sustainable long-term value as -- so it's not exactly -- now I'm talking at a group level, also HMVL because you touched upon Bhaskar. I mean, most of the investments, which are now going ahead are going on OTTplay, and that we've explained in a multiple number of calls. Now that business, as I explained in the Digital segment, of course, the numbers are very small, but it has shown some early proof of life. As a concept, we basically explained the concept that concept plays, given the pilferage of OTTs and given that they have now hopefully got accustomed to all the household, this will be a unique proposition, which also we will have an early mover advantage. So most of our efforts are going to creating that business. So returning the money versus creating the business, which can create sustainable long-term advantage for the shareholders and what we've been trying. On the Print business, of course, Bhaskar operates primarily in the market whereby it has either a monopoly or duopoly position, the markets are quite risk from that perspective. We, of course, are in a highly competitive market and we are doing the best of our ability. But I would call it a situation where we need to call [indiscernible]. I mean, the company is still -- the balance sheet is adequately capitalized. The company is ambitious in a sense that it's trying to create businesses for tomorrow. Now only time will tell, but we are definitely hopeful if we are putting the money behind those businesses, that businesses will be at value for all shareholders, majority and minority.

Yes. And if I may add, the net worth still remains around INR 2,000 crores at a consolidated level. And we -- the quarter 1 results are not out. We have the full year results of last financial year, which shows that within our direct competitive markets, we've done as well as the other players. Yes, DB has done substantially well, but in a different market. So I think once the results of the quarter 1 are also out, we will see. So we are not -- it's not like we've been continuously underperforming in our markets. We've been performing in our markets. The results have been good. The positive news in this quarter is also that the commercial categories have all grown. We have been able to improve our pricing also. So while government volumes had to or not there for certain reasons and not fully compensated by political party revenue. The fact that commercial has fired and the pricing has moved will hold us in better state. So from a core business proposition point of view, there's nothing which is so drastic, which has happened, which requires a May Day.

So -- but when -- if you keep losing INR 150 crores every year, INR 100 crores to INR 150 crores, it will one day show up. Mutual funds are not there. No new people are coming into the stock. So the writing is on the wall. If current state of FS continue writing is there on the wall.

Well, Mehul, I totally take your point. But you know nothing here shows that we will keep on losing INR 150 crores, that is assumption, I don't think you should take that assumption. We don't give forward guidance, et cetera, but I am very hopeful given now how the Print business and I'm now talking about only the core business, how that is poised, we will definitely not lose money this year. I mean, at a cash level I'm talking about.

Okay. My next question is on Digicontent. Is it okay to ask the question in this forum or...

Not exactly. This is not a Digicontent call, Mehul. We can an offline discuss that.

No, because Digicontent, the company secretary does not respond to e-mails. The company -- the shares were not trading for a long time. We were placed on dynamic surveillance and I asked a few questions. I also sought a call and nobody responded. So I even called HT Media investor e-mail ID and I did not hear back from Anna also.

Okay. Fair enough. So Mehul, why don't you just send -- resend that same mail to HT Media investor ID. We will ensure that you get a response.

Okay, okay. Because see Piyush, when I look at HT Media, Digicontent, et cetera, my question is, in terms of behavior of the management, a lot of things are not looking nice. For example, at Digicontent, the quarterly results -- the quarterly result, the Board meets only for 25 minutes. You, as a company, that has not shared a rupee with the shareholders. And almost the same Board, people are there in both the companies. Now it is controlled at the family level. And 25 minutes, you are not given a rupee to the shareholders all these years and you finish a Board meeting in 25 minutes. What are you reviewing? What exactly are you reviewing? I don't know. So I just thought I should share my sentiment in terms of observation, what is visible.

Well, fair enough. So let me answer that one by one. At Digicontent level, there is still a big loan, which is outstanding. And that loan, of course, part of it has been paid back, but the entire loan still not has been paid back. So that pretty much is on returning the money to the shareholders. In terms of the Board meeting, I don't know why you said 25 minutes. I mean, this is a UFR for the first quarter. And between the Audit Committee and the Board meeting, I think it takes easily about 1 hour, 1.5 hours. But I don't think time is a variable, which decides and they are no common shareholders. I think there is suppose one common shareholder. But there are -- at the family level, of course, the shareholders are the common. But in terms of independent director, there's a brand-new set of independent directors in Digicontent. It's not like it has common shareholders and they don't review anything. Everything is reviewed and the Board meeting, including Audit Committee lasted definitely more than 1 hour. Even in the quarterly results, forget about the annual results, which is much longer.

Coming to the surveillance measure, Mehul, that is not a measure that has anything to do with the company. It is at the stock exchange's prerogative to put these measures on. And we -- as a follow-up to your name, we have checked with the company secretary and we were advised that it has been already conveyed to you about the same. So that is...

But correct me if I'm not wrong, Mehul has the Digicontent content stock, which I saw about 2 days ago, I haven't seen it today. Hasn't that gone about 50% in the last 2 months?

No, it has gone up, maybe. But I'm -- with respect to the surveillance. And I had asked questions, firstly, why are we in dynamic surveillance?

We do not -- we may not comment on it, Mehul. That's something, which we'll ask the stock exchanges, they do not disclose. They do not disclose either to us or to anybody. So it is a shock exchange's prerogative to put certain stocks on a surveillance.

No, but isn't a management concern that you have been put on dynamic surveillance. You would have your hypothetical reasons to address them also, isn't it? I want to know what the management...

Mehul, the first time that these ASM and GSM measures got done, which was about a year ago. And when we checked with the stock exchange and my understanding, you can correct me if I'm wrong because you're a market participant, I've been given to understand, it has nothing to do at what the company is doing. But at any given point in time, more than 800 to 900 companies are on ASM/GSM. So it is not like the moment you talk about ASM/GSM, that's a rating throw on the balance sheet.

Yes. But if I'm the promoter of the company and I care for my shareholders, will I not be losing night sleep that the share is not trading. And will I not communicate something? There is no communication at all.

Mehul, we can discuss this offline. But at this point in time, I don't agree with you on the stock because I'm feeling very well for the shareholders with the stock price, indeed, has moved over the last 2 months away it happens.

The volumes are very thin, Piyush. It is okay.

I know, but that is the liquidity in that company.

All the best for the coming quarters and hope to see things looking up or at least please sell some noncore assets. That is my request to the Board.

Thanks for your patience Mehul. We will do the best we can.

The next question is from the line of [ Mehul Parik ].

Can you hear me?

Yes.

Yes. Please go ahead.

I have one question. I had asked this and you have clarified it. But I'm just seeking more clarification that if I have taken a 1-year subscription of say INR 1,000 on OTTplay, would that reflect as INR 250 crores in the current quarter? Or would it reflect as full INR 1,000 crores in the current quarter?

INR 250 crores.

So this -- so that means this INR 9 crore revenue that we have reported on OTTplay in HMVL, that is a quarter of the annual subscription, right?

Yes.

That is the quarterly pro rata component of the annual subscription.

Just, however, to clarify, it's not just that we are annual subscriptions. We have various periodic subscriptions as well, yes.

That I understand, the principal remains the same.

The next question is from the line of Hari S.

Yes. I'm audible, sir?

Yes. Please go ahead, Hari.

Yes. Two questions, sir, like I recollect like one of the earlier conference calls a couple of years back, we had a discussion on this Ad revenue. And that time it was like for election because of elections, our Ad revenue has increased actually. And we discussed that actions sir at one-off event that they may not happen regularly. But now the company is saying because of the elections, our Ad revenues have gone down?

Yes. Hari, that's a very dynamic situation. Let me explain that a little bit more in detail. So 2 things happen whenever the union elections or the state in which the publication is present happens. The elections are announced in that state, there are 2 trends which happens. There is one called government revenue, which obviously once the model code of conduct comes into play, that stops. Now this is what we call the DAVP revenue, which is basically the government releases which come in the publication. However, the trend that you're referring to is the political revenue or the party-related revenue, which counts. Now what you're talking about in that particular year, we've got a lot of political revenue. But unfortunately, in this year, the government revenue, of course, stopped after the Election Commission imposed a model code of conduct, but the political revenue didn't come. So what happens in such a situation is the government revenue, of course, went down, which had to go down. But the political revenue, which more than over compensated that in that particular year did not come. So hence, the elections this time were actually a net negative rather than being a net positive.

Also to add, actually, as usual some of the benefits of the election, [indiscernible] actually predate the election. So quarter 4 saw a lot of benefits from the election revenue because as a run-up to the election, there was a lot of heightened spend, which then, of course, with code of conduct, rise up. So in this instance, because the elections happened in the beginning of the quarter, most of the benefits towards the run-up of the election happened in the previous quarter.

So that's the dynamic, Hari. I hope we've been able to answer your question.

Okay. And the other thing is regarding Ad revenue, like can't we get down of this scale and increase Ad revenue share tremendously to get out of this loop of lower revenues, into operating losses and all? Can't the company try aggressively by disproportionately growing Ad revenue, sir?

No, that's absolutely the plan, Hari, and I think my colleague did allude towards that. So there are 2 levers. Of course, there is a volume of prioritizing that comes in the publication and then there is the Ad pricing. At this point in time, we are working very aggressively to work on the ad pricing, although the volumes are already back, but the pricing is something which is under pressure. So we are working very, very aggressively trying to take up the ad pricing. And as you can understand, pricing by nature comes to the bottom line and we have seen some early success in the first quarter and that's the point when Anna said that the commercial speed has worked up, but the government revenue is the part which has alluded us in this particular quarter. So if our pricing sticks and the program goes as per plan, you will see ad revenue performing better and better in the second quarter and the third quarter because that is a plan which is already under motion.

And the final question, sir, regarding this OTTplay, like is this -- can we out-license to other companies in other countries? Is there any option of that? Is this an exclusively new product or it's available all over the world, sir?

No. So direct content rights do not allow us to take it beyond the country's border. So this is a Pan-India product at this point in time and we cannot air this content outside the Republic of India.

The technology behind it, it can't be out-licensed it, sir?

No. We can do the technology, but the content, which is running on the technology is licensed for India. Technology can be, but the content can't be.

The next question is from the line of Kavish Parekh.

This is Kavish Parekh from B&K. Sir, two questions. Firstly, on the core Print business, how is the newsprint trajectory looking at this point? So what was the average newsprint cost this quarter? And how do we expect it to pan out over the coming quarters? And secondly, on the Advertising revenue, what has really kept the Ad revenue under pressure? As discussed earlier, our competitor has reported a high single-digit growth, led by a mix of high volumes as well as higher value. I understand that markets are different, but what will help us record growth here? So are we in a position to improve yields?

Yes. So Kavish, let me just give a highlight and then I'll pass it on to Anna. Look, on the competitive -- competitor question, let me just paint a picture for you. In both the states, where our competitor has a pole position, they're part of a duopoly. Whereas our Hindi publication has a pole position in Bihar, but is in the cost free as far as the UP and Uttarakhand markets are concerned. As far as English is concerned, we are definitely a duopoly in Delhi and working and let's call a competitor in Maharashtra, the city of Bombay. Now that competitive position has a huge bearing on pricing, which brings me to the second part, which I will just highlight -- which I was just explaining to the earlier participant. Pricing is something that as a program, we are working very aggressively and we've seen some early results in the first quarter. The volumes are back, the pricing is under pressure. So that's what we are working on. And if that pricing fee sticks, you will see better revenue performance. And as far as this quarter is concerned, I mean, if you just equip the government revenues, which obviously came down by about 25% to 30% because of the model code of conduct, you can see that the revenue will already be up. But that's the high-level picture. I'll just pass it on to Anna.

Yes. So in the relevant market for us, we have seen industry volumes come down by 12%. So in the market that we are in, both English and Hindi, the market volumes have also gone down by percent largely all led by the government piece. Commercial is [indiscernible] and therefore, as Piyush was mentioning, the market also matters. In the markets we are, the industry volume is also down. So that is to kind of add to that point. And on newsprint, we are at about -- on a consol basis at about INR 48,000 crores. We are seeing some pressures on pricing, given all the disruptions in the market from a supply chain logistics -- global supply chain logistics perspective. However, Q2 also, we expect to be at this level with slightly probably marginal increase because we have visibility to that. But right now, we are not seeing the newsprint prices easing. It will probably increase a little bit till the situation has settled. But next quarter, we are not expecting a major shift from the levels.

Right. Just as a follow-up, what is the contribution for government ads for us, both in election periods or, say, 4Q '24 versus 1Q '25?

About 20% to 25% is broadly the government contribution to our contribution.

But in the fourth quarter, to your point, it was much higher. But I'm talking about both the government ad and the political ad put together because both whatever the run-up to the election in the fourth quarter is where the model code of conduct came in. So it is slightly higher in the fourth quarter and slightly lower in the first quarter.

Right. Got it. Got it. And on the newsprint, the follow-up is that what kind of -- what level of inventory do we hold? Is it for a period of, say, 3 to 4 months?

Yes, something like that.

The next question is from the line of Ketan Athavale.

I'm Ketan Athavale from Robo Capital. Sir, I wanted to know when can we break even in the Digital business?

So Digital business is largely -- the losses are only pertaining to OTTplay. The rest of the business are mostly at break-even or marginally profitable. So OTTplay, this is only the second year of the business in its current state of business operations. And therefore, a little too early to get profitability. Having said that, we have said that as the news scale up and our scale builds that the loss has been significantly reduced for this year as compared to last year. But we will not be looking at profitable at least this year for sure.

Okay. And do we have any updates on NOTEF guidelines for Radio?

Not at this point in time, we are.

Well, I think that's an industry issue and we've been, along with the industry, making representations with the ministry. So we are hoping that they can be notified pretty soon. But as I say, it's not done until it is done. So we are waiting for that at the industry level. And once they happen, then it will be hugely beneficial to the company.

With this, we come to the end of the Q&A session. If you have any further queries, please reach out to the Investor Relations team. More contact details are given in the investor presentation and are also mentioned on our website. I now hand over to Piyush for closing remarks.

Thank you, dear friends, for joining our Q1 FY '25 call. We really hope to bring out better set of numbers as we go forward. So I have given you and explained the reasons, which is primarily the government revenue, the absence of that in this quarter. And I wish you all the very best, and a happy weekend. And we look forward to talking to you and addressing you in the next quarter. Thank you.