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    Star India reports Rs 1,216-cr loss in FY19

    Synopsis

    The company followed a ‘conservative accounting principle’ and booked expenses of Rs 4,000 crore on the Indian Premier League (IPL) during the fiscal under review. Star India suffered losses despite a 35% increase in revenues during the year.

    Agencies

    Star India’s operating loss stood at Rs 1,336 crore in the fiscal.

    Mumbai: India’s largest entertainment company Star India slipped into the red in the financial year ended March 2019 with a Rs 1,216.13-crore loss as against a net profit of Rs 287.69 crore a year ago, according to its recent filings with the registrar of companies (RoC).

    The company followed a ‘conservative accounting principle’ and booked expenses of Rs 4,000 crore on the Indian Premier League (IPL) during the fiscal under review. Star India suffered losses despite a 35% increase in revenues during the year. An e-mail query sent to Star India remained unanswered till press time Tuesday.

    According to the consolidated financial statement, sourced from business intelligence platform Tofler, the company’s total revenue from operations stood at Rs 12,341 crore in FY19 as against Rs 9,149 crore a year ago. This includes advertising revenues of Rs 7,311 crore – up 49% – and distribution revenue of Rs 4,128 crore – up 9%. Revenue from other sales and services also doubled to Rs 902 crore.

    Total expenditure also jumped 58% to Rs 13,707 crore from Rs 8,694 crore a year ago. The spike in costs is attributed mainly to a 66% increase in programming and operating cost to Rs 10,296 crore, a 34% jump in employee cost to Rs 1,198 crore, and a 57% jump in marketing cost to Rs 1,168 crore.

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    ET estimated that the company recovered around Rs 1,750 crore from advertising revenue on the 11th edition of the IPL. FY19 was the first time when Star India had both TV and digital rights of the cash-rich cricket league, after it outspent its rivals with a break-the-bank bid of Rs 16,347.5 crore for five years in 2018.

    “In FY19, Star had one full IPL season and almost 20% of the 2019 edition, which was advanced due to the general elections. As per its accounting practice, Star has recorded over Rs 4,000 crore expenses on IPL in FY19, which has put a drag on its balance sheet,” a source said.

    Rohit Dokania, senior VP – research at IDFC Securities, said that Star has done a great job in monetising IPL. “While there is a significant jump in ad revenues because of the way it monetised IPL, there is also a drag on the profitability, which is as per the nature of any sports rights. In the initial years, you will lose money, while by the end of the cycle, you hope to recoup and make profits. The same is visible on the cost side,” he said.

    Also contributing to the loss was Star’s digital streaming service Hotstar, which individually reported a net loss of Rs 558.38 crore on a revenue of Rs 1,112.74 crore. Senior officials had earlier said that the company believes in the future of Hotstar and is committed to invest for long-term gains.

    According to Dokania, Hotstar will continue to be a near-term drag, but it is a necessary one. “Digital business requires heavy investments in content and technology. That should not be too worrying for Star,” he said.

    During the financial year, Star India invested Rs 832.32 crore in Novi Digital, the holding company of Hotstar. Ajit Mohan, the Hotstar chief executive quit to join Facebook as India head during the year.

    Star India’s highly profitable regional entertainment business also witnessed a 9% drop in net profit to Rs 271.85 crore, down from Rs 298.22 crore. The regional business’ revenue was up 11% to Rs 1,445.10 crore during the fiscal.

    Star India’s topline puts it ahead of its peers like Zee Entertainment Enterprises (ZEE), Sony Pictures Networks India (SPN) and Viacom18, but in terms of operating profit, ZEE leads by a wide gap. In FY19, ZEE had posted an operating profit of Rs 2,564 crore, SPN Rs 780 crore and Viacom18 Rs 199 crore. Star India’s operating loss stood at Rs 1,336 crore in the fiscal, as per data sourced from RoC.

    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

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    1 Comment on this Story

    Sanujit Roy302 days ago
    How are the serials running
    The Economic Times