Den Networks, one of India’s top cable feed providers, reported better profit margins for the three months ended September after it was able to keep a lid on payments made to broadcasters like Star, Zee and Sony.
The company has been seeing a lot of volatility and uncertainty over its margins and financial performance after the implementation of the new tariff order in February this year.
The tariff order took away the power of packaging and pricing TV channels from cable companies like Den Networks and gave it to broadcasters like Star and Zee.
The broadcasters made use of their new-found power to implement steep price increases for their popular channels, which has in turn hurt demand for cable TV services.
Despite the volatility, numbers for the July-September quarter reveals that Den Networks is starting to get to grips with the new tariff system. The situation is likely to improve even more for cable operators once TRAI puts in some tweaks to the tariff order meant to curtail anti-competitive behavior by some TV channel owners.
For the July-September quarter, Den Networks reported an increase of Rs 7.3 cr in its subscription revenue to Rs 178 cr..
While normally this would have entailed a similar increase in the payout made to pay channel broadcasters, in this case, the pay channel payout remained unchanged at Rs 159 cr.
Den’s pay-channel costs — which had been in the Rs 150 cr range — had fallen to just Rs 126 cr in the January-March period as most subscribers did not or could not activate pay channels immediately after the new tariff order came into effect.
The company’s success in keeping content costs flat in the latest quarter helped it report a Rs 7 cr improvement in its operating profit due to the higher subscriber revenue.
Den, which provides cable TV feeds to smaller cable operators, was able to post operating profits of Rs 48 cr for July-September, up from Rs 41 cr in the three months prior.
During the previous (April-June) quarter, Den Networks had been unable to show the same level of adaptability and profit growth as competitor GTPL Hathway.
However, the exact source of the increased subscription revenue in July-September has not been made clear by the company.
An increase in subscription revenue for a feed provider like Den Networks can be because of an increase in the number of subscribers, because of higher spending by existing subscribers, or because Den Networks kept a higher share of the total subscription amount paid by subscribers and paid a smaller share to its local cable partners.
Den Networks, which is being taken over by Reliance Jio Infocomm, did not give its subscriber numbers for the quarter, which would have thrown some more light on the source of the increase.
