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Edited Transcript of SUNTV.NSE earnings conference call or presentation 9-Aug-19 12:00pm GMT

Q1 2020 Sun Tv Network Ltd Earnings Call

Chennai Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Sun TV Network Ltd earnings conference call or presentation Friday, August 9, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Rajaraman Mahesh kumar

Sun TV Network Limited - President, MD & Additional Director

* S. L. Narayanan

Sun TV Network Limited - Group CFO

* V. C. Unnikrishnan

Sun TV Network Limited - CFO

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Conference Call Participants

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* Alankar Garude

Macquarie Research - Analyst

* Gaurav Agrawal

* Jaykumar Doshi

Kotak Securities (Institutional Equities) - Equity Research Analyst

* Kapil R. Singh

Nomura Securities Co. Ltd., Research Division - Executive Director

* Prateek Barsagade

Edelweiss Securities Ltd., Research Division - Research Analyst

* Sanjay Chawla

JM Financial Institutional Securities Limited, Research Division - Research Director

* Siddhartha Bera

Nomura Securities Co. Ltd., Research Division - Associate

* Vishnu K. G.

JM Financial Institutional Securities Limited, Research Division - Research Analyst

* Yogesh Kirve

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Ankur Periwal

Axis Capital Limited, Research Division - VP of Media and Logistics

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and a very warm welcome to the Sun TV Q1 FY '20 Earnings Conference Call hosted by Axis Capital. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Ankur Periwal from Axis Capital. Thank you, and over to you, sir.

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Ankur Periwal, Axis Capital Limited, Research Division - VP of Media and Logistics [2]

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Good evening, and welcome to Sun TV Networks Q1 FY '20 Conference Call. The call will be initiated with a brief management discussion on the quarterly earnings performance, followed by an interactive Q&A session. As usual, we've got with us Mr. R. Mahesh Kumar, Managing Director; Mr. S.L. Narayanan, Group CFO; and Mr. V.C. Unnikrishnan, CFO.

S.L., would you like to add some opening remarks or should we open the floor for Q&A.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [3]

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Yes, in the interest of clarity, I just want to give 1 data point, so that much of the questions on the IPL numbers get preempted. We had a little bit of revenue getting recognized in the preceding quarter because the IPL started off in the last week of March this season, unlike the first week of April last season. So all revenues were booked in the quarter ended June of 2018 last year, whereas in this year, these revenues have traveled 2 quarters, that is March '19 as well as June '19.

The other thing which I want to just mark here is, the overall revenues that we earned through the distribution from the central sponsorship [kiti] for the current season, as compared to the previous season, was down by about INR 70 crores. That is something which is driven by the formula based on which the distribution is happening because we don't -- we are not privy to what we broadcast or have signed off with BCCI. So we had a high number last year. It is going to be lower this year. And apparently, it will go up again next year. So what seems like a massive fall in the IPL operations is actually to be seen in this context. So I just thought I will pass that data point before we start the call. And now we can start off with all the Q&As.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Siddhartha Bera from Nomura Securities.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [2]

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Sir, my first question is on the ad side. What is the outlook for this year given the first quarter we have seen a 2% growth? So any color if you can give, how is it likely to trend for the remaining part of the year?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [3]

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I think the whole country is going through kind of a bearish wave for a variety of reasons and it's all driven by the macro headwinds. So we are seeing a lot of deceleration in sectors like auto and real estate. And because of that, there's some multiplier effect, which is pulling down the momentum in the economy. So if you look at all the numbers that have come out from FMCG companies, barring some notable exceptions, like Asian Paints, everybody is painting a very down outlook. So in that context, we shouldn't expect anything spectacular for the remaining calendar year at least. I mean, people are saying that if the monsoons are good, things will pick up because of better spending power coming into the rural economy. But all that is still a guesstimate. So I think the outlook for advertising this year is pretty challenging. And I don't think we can give any guidance that we are going to do even reasonably well on advertising. I think we need to set expectations very, very reasonably. So it will be lucky if we end up with a mid-single-digit kind of a growth this year. So that's the kind of outlook, as we see the remainder of the financial year from this standpoint.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [4]

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Got it, sir. But any benefit do we expect from our new launches in the Bangla genre and our market share in Tamil, how does it behave? And anything can we get from...

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S. L. Narayanan, Sun TV Network Limited - Group CFO [5]

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Yes, well, ratings are considerably improved in the last 4 weeks. And I request Mahesh to give you some headline numbers.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [6]

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Yes, I think, especially in Tamil, if you look at Sun, post the impact of the tariff order and also the change in the distribution landscape, we have seen some good bounce back in the overall rating numbers. In fact, in between [28], we had gone as low as 908 GRPs. This week, the ratings for our research come out yesterday, we are 1,130. So we are, I think, improved by over 20%, which is closer to 3% of the market share gain, which we are able to demonstrate. And [ad world], we are also seeing some of our competitors moving substantial share in the market in [PM]. Similarly, even in Andhra Pradesh, we are making some decent gains. In the pecking order, this time, we have become the #3, and the gap between #2 and #3 is very, very marginal. And in the fiction, we've grown substantially in Telugu, Tamil, and to some extent, even in Kannada.

So what about the packaging which we have been working on improving the content is paying off, but we are having -- like last week, we had a new launch in Tamil. We have series of launches happening. So we are extremely confident and hopeful that we will further improve from this and gain further market share.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [7]

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Got it, sir. But the costs have...

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [8]

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Which will translate into better monetization. So we are able to improve the overall market share. Definitely, we will also improve the revenues accordingly.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [9]

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Okay. But on the cost side, so content costs, sir, we are seeing a very sharp increase in the quarter. So can you throw some more light on that front, that is it sustainable? Or is it going to normalize? So anything you can highlight on that front?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [10]

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On the content side, basically, if you look at last year's same quarter index, one of the big-ticket items, which is to increase is primarily because of Bangla launch, which was not there last year. So that will be approximately INR 15 crores, INR 16 crores of incremental content cost, which has come in. Otherwise, I think it should normalize at this level is what I think is our estimate.

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Operator [11]

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The next question is from the line of Jay Doshi from Kotak Securities.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [12]

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Quickly, sir, first give us the breakup of revenue, and I mean, depreciation, amortization, is usually better.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [13]

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The position is INR 21 crores and the amortization is INR 137 crores.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [14]

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Right. And the breakup of revenues, please?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [15]

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Advertisement revenues is INR 368 crores, broadcast is INR 10 crores, international subscriptions around INR 41 crores. (inaudible), including digital is about INR 169 crores. DTH is INR 228 crores. Movie production is around INR 41 crores. IPL is INR 244 crores.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [16]

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And so the movie -- related -- the movie production-related cost would be how much in this quarter. So there's INR 141 crores of revenue recognition, right? So there will be some... (inaudible)

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [17]

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Movie is only INR 41 crores now.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [18]

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Sorry, my mistake. It's INR 41 crores. Sir, there will become expensing related to that in the amortization item, right, other than the satellite (inaudible)? Correct?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [19]

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No, INR 30-odd crores.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [20]

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INR 30-odd crores, right. Second is, sir, domestic subscription revenue, if I -- what would be the growth -- sorry, I just got the number. So overall growth for domestic subscription will be around...

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [21]

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Pay channel has grown by around 70 -- pay channel is around 70% and DTH is up by around 8%.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [22]

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Correct. So why -- is there any onetime or oneoff or catch-up revenue component in this, given that there is a huge divergence between DTH and pay channel, so.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [23]

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Yes, because, I think, initially, the order, the NTO which we implemented during the March quarter. So there is some amount of catch-up revenues, which got accounted for during April and May.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [24]

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Correct. So what would be the underlying growth in that case? And would you be able to give us some indication of what we should expect for the full year?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [25]

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This is the first quarter, which is where the new tariffs orders will be implemented. So I think it will take some more time before we have an exact clarity on how the numbers settle down. Because in the first quarter, there has been a lot of challenges in terms of us being ready and getting there -- getting the numbers from the operators and DTH, all that is becoming a challenge, but things are now settling down. So I think we should be able to get some clarity during the Q2 actually.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [26]

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No, no. My -- at very broad level, will it be upwards of 20% or under 20%. If under 20% -- 15% to 20%...

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [27]

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No, upward of 20% should be there -- definitely achievable.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [28]

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20% plus for domestic subscription?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [29]

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Yes, yes, certainly.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [30]

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Great. And in terms of IPL. Sir, I did hear your opening remarks. So the gap between last year and this year, the operating profit level is about INR 75-odd crores, it was INR 200 crores last year, is INR 125 crores for the entire season. And I think last year, you had a one-time component of prize money from [15 20]. So still there is a gap of roughly about INR 50 crores, INR 55 crores. So what should be the sustainable -- or more like a normalized number over the 5-year cycle?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [31]

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Jay, the reason why this is a very difficult thing to get a handle on is because of the way the broadcaster has negotiated the deal with BCCI. While we know it is INR 16,500 crores for the 5 years, we really don't have much color on what is going to be the payment that they will give to BCCI every year. And then you also have other sponsors like title, (inaudible) it's all the -- so I think the sponsors and the ticket sales have shown -- ticket has shown an increase. I think we should be able to do much better in the coming years because if I look at the number that has been contracted, which is in the public domain, it seems to me that the remainder of the year is going to be a better thing than what this year is. That's the only way I can prognosticate, because we really don't know how they negotiated the deal, but -- whereas the earlier dispensation with Sony -- we knew that it was heavily back-ended. It was almost like 1/3 in the first half and 2/3 in the second half. And each year, it was a very steep climb in terms of the distribution. So I would imagine that it will probably go back to around -- may not be INR 200 crores, but maybe around somewhere between INR 125 crores and INR 200 crores, assuming that we don't win the tournament.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [32]

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I got it. That is helpful. Okay. I understand the difficulty in predicting or projecting it in your (inaudible).

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S. L. Narayanan, Sun TV Network Limited - Group CFO [33]

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And plus also there I think last time, we were at the #1 position for -- in the net term rate. So that also gave us some significant uptake. I think we have been telling that it's based on the position, which there is an increase in number.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [34]

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Right. So I guess, adjusted for all that, maybe last year was INR 175 crores or INR 180 crores, this year is INR 125 crores. For next year, will be somewhere in between, or at least higher than the current year?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [35]

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It will definitely will be higher than this.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [36]

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Okay. That is helpful. Finally, what are your contracts or agreements with the key content producers in Tamil market? Is that exclusivity clause still pretty much there or applicable to the content?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [37]

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Yes, very much, very much, very much.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [38]

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And what is the -- what would be the inventory, ad inventory sharing that you have with them right now, per hour?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [39]

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It depends on the time slot. So basically, I think, on a 7- to 8-minute, we get 3 minutes average.

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Jaykumar Doshi, Kotak Securities (Institutional Equities) - Equity Research Analyst [40]

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For a 0.5 hour episode? If I -- so there is no change per se?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [41]

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No change.

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Operator [42]

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The next question is from the line of Kapil Singh from Nomura Securities.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [43]

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Congrats on the performance. I just wanted to check, is there any update on promoter compensation for the current year?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [44]

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It will remain the same number...

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S. L. Narayanan, Sun TV Network Limited - Group CFO [45]

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Same level as 2 years -- the last 2 years ago.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [46]

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Okay. So I mean, it has remained at this level for the last 2 years. So are we -- is there a long-term policy to fix it here if you can give that? I think that will be more helpful. You've discussed that in the past as well.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [47]

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We have made an announcement, I think, it's been central stock exchange, but for this financial year, it will remain the same numbers as last 2 years. Going forward -- and we'll get back, we'll inform -- talk to the Chairman have been easily giving production for the next period also.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [48]

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Yes. I mean, the question here is, what should be the long-term policy that we should assume? And also, if there is any update on our dividend policy?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [49]

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Kapil, I think in the absence of any definitive announcement, you should only take this announcement as indicative, and say that this will impact these levels, which date back to FY '18. So we are now saying that there is no difference from the compensation that was paid for the last 2 financial years. So this financial year also, it will reflect at the same level.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [50]

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Okay. And on the dividend policy?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [51]

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If this happens over the next few years, I think you will get some comfort that the compensation is not going to be changed. I think that's the way I will read it because the other reason we can't give any -- I mean, it's not for me to say that it -- this is it and it won't change. For all I know, it could change next year. I don't want to say anything now because I'm not authorized to say this.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [52]

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Okay. Yes. And on the dividend policy, can you give an update?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [53]

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We generally are paying out around 45% to 50% of the available disposable profits. I think that's the kind of number that we will be doing it. Also, sometimes, we have taken up liquidity levels to a higher point because there were some opportunities, which seem like doable. And that's the reason why we did keep some money. And also we are now at a time where cash is king. I think we are running a company, which is extremely prudent in terms of financial norms. It continues to be completely debt-free and very liquid. We have close to INR 2,800 crores of cash as of end of -- more than INR 2,800 crores of cash end of 30th June. And we plan to hold some excess liquidity because times are very uncertain and cash is king. But we will continue to pay fairly regular dividends. And the reason why it seems like it's fallen this year as compared to last year is because last year, we had the 25th anniversary -- special dividend for the 25th anniversary. But suffice it to say that we would be generous in distribution anywhere between 40% to 45%.

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Kapil R. Singh, Nomura Securities Co. Ltd., Research Division - Executive Director [54]

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Okay. And could you also give an update on the movie production plans for this year, if there is any details to share?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [55]

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There is a movie -- ongoing production happening. It's slated to be released sometime in end of September. And one more should happen before end of March. The second one has not started as yet. We did one, movie released during April. September, there's one more movie that's almost in the final stages of production. Shooting is almost complete. And the third one, we are targeting before end of March.

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Operator [56]

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The next question is from the line of [Deep Shah] from AMBIT Capital.

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Unidentified Analyst, [57]

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My first question is really on subscription. Sir, your comments on bundle adoption, was it a la carte? And if you can share the subscriber count in ARPU, that would be helpful. Secondly, sir, what is the CapEx that you see in the movie acquisition space given that lot of your peers has been very aggressive recently? And what would be the market share in movies? Thirdly, based on the recent results, it seems that around 15%. We've a lot of subscribers, but DTH has not gained. So if we can highlight what has been your network reach in your markets that will be helpful.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [58]

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(inaudible) So basically post tariff and at least from the viewership point of view, it has taken a big impact. But over the past couple of weeks in all the key markets, we have bounced back and we are coming close to the 3 [originals]. So now our focus and objective is to get back to the reach percentage it was providing prior to the implementation of the tariff order. So in every single market, we are working towards that. So we are making all efforts in terms of ensuring that the channels are placed and it is carried by all the DTH and the cable operators, and it is placed in the appropriate entry. And so it is accessible to majority of the subscriber universe. So that is why you're also seeing a good improvement in the rating numbers. So that's the last question. But -- so we're not able to follow the other questions. Can you just repeat the question?

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Unidentified Analyst, [59]

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Yes. So on the subscription landscape, how has been the bundle adoption versus a la carte? And if you can share your subscriber count to ARPU?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [60]

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I think it's too early in the [bookings]. And I think people have not -- very few subscribers have opted for this a la carte. Majority of the service providers and the customers have opted for the entire book of channels.

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Unidentified Analyst, [61]

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Right. So one last question on the movie side. Given that one of the peer has been very aggressive in the southern markets, how do you see the capital intensity in the movie acquisition space? And your comments on market share that you will have in the movie side in southern markets?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [62]

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Yes, I think we still continue to buy a good amount of movies. More than 60% or more of the movies released across the southern markets are purchased by us. And if we look at the last, maybe couple of quarters, a lot of big ticket names of the -- are -- have been come into our [kiti]. So I don't think there's any pressure there. Prices keep changing depending on, like I said, certain competitors increasing at several points in time. But otherwise, I think we're comfortable in terms of our acquisitions. We should look at for the financial year, maybe about INR 300 crores or INR 325 crores. Let's see budget at this point in time. It could move depending upon any high ticket movies coming towards the second half.

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Operator [63]

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The next question is from the line of Sanjay Chawla from JM Financial.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [64]

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My first question is on -- looking at the content costs. Obviously, they have doubled Y-o-Y and you said partly due to Bangla impact -- launch impact. If adjusted for INR 15 crores, INR 16 crores of Bangla-related content cost, I'm still getting a 25% increase in content costs, excluding the movie part on a Q-o-Q basis. So can you please help us understand what exactly is driving this? So any -- what sort of content has gone in, which is reflecting in the past year on a Q-o-Q basis? And second question is on the cash balance, you mentioned is more than INR 2,800 crores. What was it as of March end? If you could share that number also? And thirdly, what was the receivable level at the end of June?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [65]

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I think, Sanjay, the point is we have moved apart from the Bangla. I think that if you look at the broadcast revenue also has come down. So there has been some shift of programs in the Tamil space from the old telecast model into the new model. And there have been newer programs, which have a slightly higher cost in the other city languages, has increased the cost of content primarily in the current quarter. I think what is the -- that is one question. Second, what is the other question?

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [66]

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Was there any nonfiction, any major reality show or anything, which was launched this quarter, which is reflecting here?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [67]

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Yes, yes, yes. It was actually -- and has happened in the Malayalam genre, so where we have a daily nonfiction shows (inaudible), so if you look at like adding to what we said, the moving of the slots from the private producer to the commission, the cost of content for the Sun TV has gone up by close to INR 10 crores, so Gemini more or less static and (inaudible) static and [movie] Malayalam, we've have done a nonfiction show, which is overall improving -- increase the cost around INR 5 crores or INR 6 crores and Bengla is around INR 3 crores.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [68]

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Okay. And so this is a sustainable level of content costs for the coming quarter?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [69]

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Yes, this will be the model [for the year].

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [70]

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On the cash balance and receivables?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [71]

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March numbers, unfortunately, I don't have it at this point. I think there were [2 6] or something, I don't remember that. I don't have the numbers exactly.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [72]

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Maybe I'll take it offline.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [73]

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Yes, yes, right. What was your third question?

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [74]

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On the under -- what is the level of receivables as of end of June -- compared with the fourth quarter?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [75]

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It was around INR 1,193 crores overall. So I think in terms of number of days, I think it's -- the advertising is slightly up from about 98 days to around 101 days. DTH revenue also slightly stressed for some time. So it's -- from about 120-odd days, it's up to around 140, 145 days.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [76]

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Sorry. It's kind of (inaudible) one line. Sorry, sorry.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [77]

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From 98 to around 101 days.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [78]

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He's asking total.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [79]

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Okay, INR 1,192 crores, INR 1,193 crores.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [80]

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INR 1,193 crores?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [81]

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Yes. You mentioned about ad and DTH going up. Which is the other component, which is also impacting the receivable level?

International, I mean, the amount is not very significant. But I think that's also slightly gone up from what the 3 months, 3.5 months, is up to around 5 months. So -- I think, otherwise, things are okay with this. The larger components are obviously advertising and the DTH revenues. And I think we also have -- our group company numbers have come down. In fact, earlier it was at a much higher level, it has come down to 4 months, 4.5 months outstanding. So there's a significant [confidence] more than able between last quarter and now. It's positive.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [82]

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Okay. Okay. And just last, a quick question on -- you mentioned about expectations of maybe you said you will be lucky if you do a mid-single-digit growth rate on the ad revenue front. We've started on a reasonable note. I mean, we are not down Y-o-Y in this quarter, and obviously, there is still festival season and stronger quarters which are still there. So I'm just wondering, I mean, are you seeing something in the environment, which has changed, which doesn't make you optimistic about the festive season also?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [83]

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If you see the news that's coming. See auto sales are down, tractor sales are down. 2-wheeler sales are down. There's an enormous unsold inventory of homes and (inaudible) are down. (inaudible) Everywhere, when we got out, we see only bad news. So that's the reason why I'm saying that we shouldn't build any major expectation. Of course, our people on the ground are working harder than ever before, and we are looking at very, very innovative ways to give greater value to advertisers, so that we garner more wallet share. All that will happen. Our own internal targets are much higher than 10%. But I'm saying that looking at the horizon with so many macro headwinds, it is not fair on our partners responsible management to put out any kind of growth expectations because there's bad news all around.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [84]

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Understood, sir. Are you seeing similar caution from the regional and local advertisers because they are also contributing a significant amount to your (inaudible)?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [85]

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Absolutely, absolutely. All, like, for example, the retail trade in Tamil Nadu been very cautious. Generally, there is a big push of advertisement during the season because this month is called (inaudible) today. All the guys have put up payment during the next -- I mean, during this month, which is for 30 days. Their spend hasn't actually shrunk a lot because there is no liquidity in the system. People are actually not seeing any ROI in terms of putting money in on the ad. So there is no walk-in. People are not coming in, purchasing clothes, et cetera. So overall, that's what I think from a macro point of view, things are not looking very rosy. So there is a liquidity crunch. So I think we are seeing every single sector, if you take automobile, there are close to 12 companies based out of Delhi, there has been a huge cut in the ad spend. Consumer durables like -- that also has gone down. FMCG growth, you can see even moderate reporting between 0% and 1% growth, HUL 6% growth, Colgate 4% growth. So I think if the growth rates are shrinking like this, then obviously, to maintain the margin there, taking a cut on the ad spend.

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Operator [86]

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The next question is from the line of Gaurav Agrawal from Bowhead Investment Advisors.

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Gaurav Agrawal, [87]

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Sir, on the subscription revenue, when do you see these revenues stabilizing? And what will be the run rate for this number when it -- when this gets stabilized?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [88]

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It will take at least the next 1 or 2 more quarters because things are getting stabilized on the service products having the subscriber base. And we will see some stability happening in the next couple of months.

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Gaurav Agrawal, [89]

--------------------------------------------------------------------------------

But sir, what will be the stable quarterly run rate? Like currently, it is around INR 396 crore is what you reported in Q1. So like when will you get all the benefit of digitization? So by when are we expected to get this full benefit? And when we'll get that benefit, what will be the quarterly run rate from that point onwards?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [90]

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Gaurav, like Mahesh was mentioning, this has supported the first quarter number. So once we go to the -- maybe 1 or 2 quarters when we'd also have an exact idea. Like you mentioned earlier, getting the reports of some of the guys has been very difficult on the ground, so it's too early to give you an indicative run rate at this point in time. And they're like -- I mean...

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Gaurav Agrawal, [91]

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Yes. But do you see like INR 500 crore -- can it be a INR 500 crore number on a quarterly basis? I just wanted to check that possibility maybe from Q4 or Q1 next year.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [92]

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I think that should stabilize by then. It should be okay.

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Gaurav Agrawal, [93]

--------------------------------------------------------------------------------

Okay. So INR 500 crore number is a fair assumption to take really?

--------------------------------------------------------------------------------

V. C. Unnikrishnan, Sun TV Network Limited - CFO [94]

--------------------------------------------------------------------------------

Assuming there are no further changes on the TRAI or the government on [what to base it right].

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Gaurav Agrawal, [95]

--------------------------------------------------------------------------------

Okay. Great. Great. And sir, you are giving your movie production plans. So I didn't get the full part. You have like 3 movies in your pipeline, right?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [96]

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No, one was done during the June quarter, one more in September and another one expected before March.

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Gaurav Agrawal, [97]

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Okay. Okay. Two more...

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S. L. Narayanan, Sun TV Network Limited - Group CFO [98]

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But 2 more on the pipeline.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [99]

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We have Kanchana 3 in the most recent quarter which has done reasonably well. It's a low-budget movie, but it made a decent profit. And in line with our strategy, we own the digital rights and the satellite rights, so that future revenue streams are also protected.

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Gaurav Agrawal, [100]

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Okay. Okay. And sir, because we had some kind of disturbance in our subscription in Q4, so was that a reason for your advertising growth by any stretch?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [101]

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See, we had issues because that was a very, what should I say, tectonic shift in the way we were going to market with all the distributors that, suddenly, everything changed, and it had to be forced spread to a large bunch of distributors. So that's the reason why we improved that disruption, but things are settling down now. And we have no doubt in our minds that given the positioning of our programming, we will be there with a very significant overall market share.

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Gaurav Agrawal, [102]

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Okay. Okay. Got it. And sir, these movies which you have produced, you will show them on your TV at some point of time, right?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [103]

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Yes, certainly.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [104]

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In fact, 2 out of the 3 are already being shown.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [105]

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All incumbents, correct.

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Gaurav Agrawal, [106]

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2 out of 3 already there. Okay.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [107]

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Like Sarkar and Petta, they have both been -- Kanchana 3 is not yet premiered. Kanchana 3 just came, so I think there's still some box office opportunities are existing. One of these days, that will also come.

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Operator [108]

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The next question is from the line of Prateek Barsagade from Edelweiss.

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [109]

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Congratulations on the great numbers. My first question would be on Sun XT. Would it be possible to share some kind of metrics on how the platform is doing? What is the MAU count? And also with Netflix now going on a mobile-only strategy, how do you see it?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [110]

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We are going to make investments into OTT. We are looking at something like INR 150 crore outlay for the next 1.5 years. So we will phase it. Now that it's actually started making money for us because the subscription revenues are now stabilized at a very predictable level, we want to now invest back into the platform and build salients because, so far, we've been using it only as another method of accessing regular content. So now I think as the time has come to put some really peppy, beautiful kind of content which youth can stack on, so that's the plan for the next 18 months. We believe that we will invest about INR 150 crores on it. And so clearly, the strategy is to position something which is unique to the South Indian audiences, something which is built on the regional flavor. We believe we have a great understanding of what would sell among the youth audiences of the regions where we serve.

Plus also a variant of that is reaching out to South Indian diaspora around the world because we are increasingly seeing a lot of downloads of Sun NXT happening in the rest of the world. So some of the things that people really like to keep a tab on is what's happening back in the home, which they left. So there would be some programming which will also be oriented to serve that segment as well.

Competition is real. I think all these people will be there. But it is also a fact that when something grows extremely rapidly, it will certainly hit some kind of a speed breaker. So certainly, we are now seeing Netflix is competing with the traditional broadcasters, who all of them have come out with their own streaming services. Like you must have read that Disney is now launching Disney+ at a price lower than what Netflix offers. Simultaneously, they pulled out content from Netflix. HBO is now coming on with HBO Max, and they're pulling out Friends out of Netflix.

So there's a lot of changes happening, and we need to make sure that we remain relevant and competitive in the markets where we are focused on. But we will -- we have a very, very strong balance sheet. Whatever investments are required to protect whatever we have built, rest assured that we will be spending on that.

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [111]

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Okay, sir. And just any sense on the traction what you're getting in terms of DAU or probably MAU?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [112]

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See, we have those numbers. Unfortunately, I don't have it now. We will try and pull it out. And all the data is there, but we've not got it here at this point in time. But let me tell you that our programs are all now available on the 3 major mobile platforms.

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Unidentified Company Representative, [113]

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(inaudible)

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S. L. Narayanan, Sun TV Network Limited - Group CFO [114]

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No, but there's only [one] we expect. But the live -- there's live TV. So all our live TV is now available on all 3 platforms. In the next few weeks, we will announce the deal with a very large telco, and we will also announce another deal with a major OTT player.

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [115]

--------------------------------------------------------------------------------

Okay, sir. Got it. And sir, just one last small thing. I've joined a bit late. Can you just repeat the revenue breakup for this quarter?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [116]

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Advertisement is INR 368 crores. Broadcast is INR 10 crores. International subscription is INR 41 crores. Analog pay channel is about INR 168 crores. DTH is INR 228 crores. Movie productions is INR 41 crores. IPL is INR 244 crores.

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Operator [117]

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(Operator Instructions) The next question is from the line of Alankar Garude from Macquarie.

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Alankar Garude, Macquarie Research - Analyst [118]

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Sir, firstly, I wanted to understand the situation in Tamil Nadu. Last time, you had mentioned about churn happening from Arasu to the private DTH operators and MSOs. So is it still happening? Can you just elaborate on that, please?

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [119]

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Yes, I think it's still happening. DTH is growing at a very, very encouraging pace. And we have also witnessed a huge growth in the private MSOs in the marketplace. So there has been a churn happening from Arasu to the other operators. And also like you must be aware, there is a significant portion of the analog which is still available in the market, so that is also incrementally getting digitized. So I mean that's what we stated at our comments on that. We hope this will continue unless we are hearing some new strategy of Arasu Cable where they might reduce the price and offer the content and all that. We'll wait and watch.

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Alankar Garude, Macquarie Research - Analyst [120]

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Okay. And possible to quantify the numbers in the market overall, the number of subscribers and how many are with Arasu and the breakup between DTH and cable as well?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [121]

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We don't have these numbers at this point in time, Alankar.

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Alankar Garude, Macquarie Research - Analyst [122]

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Okay, sir. I'll get it offline. Sir, second question is given the current challenges in the ad market, in hindsight, do you think that our Bangla launch could have been at a more appropriate time?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [123]

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In anything you can take a call like that, but I mean -- so that's not fair. So you're just saying that -- you are saying that because of this downturn, we shouldn't have gone there? Is that the question?

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Alankar Garude, Macquarie Research - Analyst [124]

--------------------------------------------------------------------------------

Yes. No, but sorry, sir. I just basically wanted to check whether the kind of revenue potential which we would have thought when we did this launch, are we trending significantly lower than what our earlier estimates were at the time of...

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S. L. Narayanan, Sun TV Network Limited - Group CFO [125]

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See, unfortunately, we didn't anticipate this new tariff order will come and drive a course through everything. So unfortunately, as we went in there, this whole thing came and threw the entire system into disarray. So that's also one of the reasons why we -- but anyway, I think it's a step in the right direction because we think that there is a lot of potential there. It is a market where there is not much of TRPs available for trading. So -- and there are 2 well-entrenched competitors, and we thought that this is the kind of play. And I think that our content strategy also has been very well thought of. All those series have been very well made, slickly made. But it will take some time. I mean, it's not -- Rome wasn't built in a day. And so we are doing all the right things. And I'm sure we will see an uptick pretty soon.

I don't think we can now sit back and say that we shouldn't have done this. We've actually applied a lot of thought, and we identified that this is the place to go because to go into the regular Hindi market would have called for enormous amounts of capital. And you know our company, we are not a company which will bet a farm. So even assuming, but not admitting, at some stage this turns out to be damp squib, it is not something that will wreck the balance sheet of Sun TV. So it's a very measured step. It gives us a foothold into a new market which is north of India. So give us some time. I think it's just 5 months since we launched -- February launch, right? So about 5 months is too short a time to evaluate, so I'd request you to give us at least a few more quarters.

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Alankar Garude, Macquarie Research - Analyst [126]

--------------------------------------------------------------------------------

Right. Sir, I got your point. And just one final thing. Marathi, it's indefinitely postponed, right, definitely not in this time?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [127]

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Correct. See, that is because of the kind of situation which is now existing. Because we all had our view of the Indian economy booming and firing on all cylinders, so we are trading with caution now. We're unlikely to go and make a big splash at this point in time. So -- well, please wait until we -- you'll hear from us. For the time being, it's put on hold.

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Operator [128]

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The next question is from the line of Vishnu K G from JM Financial.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [129]

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Sir, my first question will be what will be the budget for the 2 movies that have been produced this fiscal?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [130]

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Come again, Vishnu.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [131]

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Sir, what will be the approximate budget for the remaining 2 movies that are currently undergoing production?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [132]

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Cumulatively, it should be in the range of around INR 150 crores.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [133]

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INR 150 crores. Okay, sir.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [134]

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Max of INR 150 crores.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [135]

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Okay. Sure, sir. And regarding the digitization, sir, could you quantify how many cable holdcos are still analog in Tamil Nadu? And can you give us color on who is doing the incremental seeding of the digitalized TVs?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [136]

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What percentage is still analog you're asking?

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [137]

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Yes, sir.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [138]

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See, in our estimate, it as an upwards of 35% are still analog in this market. And in terms of seeding of TV, it's being pushed both by the private cable operators and the DTH. Like even our own group company, Sun Direct has been extremely well in Tamil Nadu. Their numbers have grown from an average of 1,000, 2,000 to 5,000, 6,000 a day.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [139]

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Sir, would it be possible for you to give us return -- how many incremental subscribers are going into cable and how many are going into DTH?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [140]

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That level -- that detailed number is not available with us.

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [141]

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Okay. Sure, sir. And if I can squeeze in a last question. So the ARPU that you received from private cable operators, is it higher than what you received from Arasu?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [142]

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ARPU from private cable operators?

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Vishnu K. G., JM Financial Institutional Securities Limited, Research Division - Research Analyst [143]

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Yes, sir.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [144]

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No, I think it's more or less standardized in the new tariff regime, so we have no differentiation in the price. It's all the same.

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Operator [145]

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The next question is from the line of Yogesh Kirve from B&K Securities.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [146]

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Just continuing with the previous question. So as of now, apart from the analog subscribers which are there in Tamil Nadu, so all other subscriber, the contingence are happening as per the new tariff order including the Arasu?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [147]

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Even in Tamil Nadu, it's the same. There's no change at Tamil Nadu. The only thing, Tamil Nadu had a bigger volume of people to shift from the analog. So across this system, it is only based on the new tariff order. The only issue has been that getting the reports from some of the smaller MSOs or the smaller payers, has been difficult because of their own inability to have the new programs and things like that. So that's the -- it's only a transitional phase. So I think once things are getting streamlined and a good software is available, I think most of them are adapting it also, so between April and -- or maybe last February. And then if we look at June or July, the reporting levels have increased considerably.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [148]

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So this -- so only -- so basically, incremental prices will come from this analog subscriber, right? So when they move to a digital platform, they will start accruing revenues that are subject to new tariff order. And we should be indifferent right now whether it goes -- whether it stays with the Arasu or it goes to the cable or DTH because ARPU should be same everywhere?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [149]

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Yes. Yes.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [150]

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Right. And secondly, in terms of -- in Tamil Nadu or Tamil channel DC, so can you just update about what is the mix of the commission, what's the sponsor? And is there further migration that we could see from the sponsor to commission model?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [151]

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The prime time, there are around 4 slots now which are in the private producer slot. The balance of the prime time slots are all commissioned already. More or less, I think it will remain at this level for the time being. So -- and in the movies, in the non-prime time, we are now moving more towards the commission than the private producer model.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [152]

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Okay. And sir, finally, on the movie, did we say the movie acquisition budget for this year is INR 300 crores to INR 325 crores?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [153]

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Yes, correct.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [154]

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Okay. So if others...

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [155]

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Yogesh, but this numbers will -- see, this is what we are looking at whatever the movies which are in the pipeline where we have signed agreements and we have a reasonable idea of their date of release in the finance -- fiscal year. Some of -- when we have seen in the past that certain big ticket movies do happen in a hurry or I mean they get finished much earlier, so accordingly, the budget will change naturally. So I think we had told about INR 350 crores I think last time. So going by what has moved during the current quarter, not much has moved, so that's why we have taken it down to around INR 325 crores. As time goes on when we -- actually, the festive season is the maximum time when you -- between Q2 and Q3 is when you find the maximum movies getting released, especially there are bigger heroes and big production houses, so we'll be able to have a fair idea of where we stand at that point in time.

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Operator [156]

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The next question is from the line of [Shanti Jain] from Bowhead Investment Advisors.

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Unidentified Analyst, [157]

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Sir, on this digital revenue, did you have any digital revenues in the Q3, Q4 of last year and Q1 of this year?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [158]

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No, we had recorded revenues for both the quarters. Like SL has mentioned, we have the platforms of retail cost. So we do have revenues that are NXT. You're talking about Sun NXT, right?

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Unidentified Analyst, [159]

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Yes. Yes. Yes.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [160]

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Yes. Yes, we had recorded.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [161]

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See, I need to explain this, what we first achieved was placement of our streaming channels on these phones because everybody is now wanting to drive data usage by offering live TV. The second phase, which is a slightly more sophisticated phase, is the placement of Sun NXT, our OTT app, on these phone platforms which would be an additional revenue stream to the minimum guarantee that we've already achieved. And that will hopefully give us a much, much better penetration into the target market, which I'm told is approaching some 450 million smartphones, of which it is reasonable to expect at least 25% will be in South India.

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Unidentified Analyst, [162]

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Sir, can you quantify the revenue is what was there in Q1 of this year, I mean, this last quarter which has just gone by and Q4 (inaudible)?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [163]

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See, we've not shared what money we are making from the telco platforms. And we don't want to give, because there's a lot of sensitivity attached to those numbers because we have 3 different contracts, and we certainly don't want too much of information out on the public domain. Suffice it to say that the digital ecosystem is actually rocking now, and we are expecting revenues to go up sometime -- as I said earlier in the call, in the next few weeks, we will announce 2 major deals: one with a large telco for Sun NXT and another one which is an OTT platform which is being supported by a very large media house. We will position Sun NXT as an add-on there in addition to giving all our channels as live streaming options.

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Unidentified Analyst, [164]

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Okay. Sir, currently, the digital revenue must be a part of your subscription revenue. Is that assumption right?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [165]

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Correct. Correct. This is captured under subscription.

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Unidentified Analyst, [166]

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Okay. Okay. And sir, you have like a lot of cash on your balance sheet. And this is the stock price has not been under pressure. Would you have plans to do some kind of buyback or list the IPL sometime in future now that is also becoming a very big part of your profitability?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [167]

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At this point in time, no plan to do a buyback. We will continue to go with this policy of quarterly dividends. And we don't want to comment on IPL at this point in time because listing it is -- I'm not sure if that -- because it only adds to more clerical work. Because today it's all getting consolidated and it's very elegantly sitting inside, unlikely that we would -- see, we need to list it if we want to use that as a vehicle to raise money or offer some shares and monetize. Neither the company nor the promoter wants to, at this point in time, sell any stake in the IPL franchise, which will only go from strength to strength, because we track the way franchises have evolved over the years in almost all Western countries. They actually multiply exponentially. So we think it makes sense to keep it inside the company for the time being.

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Unidentified Analyst, [168]

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Okay. Got it. And sir, just the last few question. Sir, a lot of liquidity issues are happening especially in media in that case. And so in your particularly Tamil Nadu market, are there competitors which are suffering from the liquidity issue and which may help you to benefit with a market share there?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [169]

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No. See, I don't think it is proper for us to comment on any of our competitors on this call, so we'd rather not comment on that.

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Unidentified Analyst, [170]

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Okay. Okay. And sir, just lastly, your market share expectations, what is it you are working towards? What kind of market share is visible for us to gain? And what is our internal target?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [171]

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See, like I said, initially, we have seen 2%, 3% growth in the market share which we've gained over the past couple of weeks. So our endeavor is to further keep growing the market share. And ultimately, it leads to the level where we were a couple of years back. So I think the desire is to go to 50% but -- and we are working towards it.

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Unidentified Analyst, [172]

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Okay. Okay. Sir, your employee expenses, they have only gone up like 3%, 4%. If I adjust for the last Q1, there were some bonus-related payments which you guys have made. But sir, this 3% or 4%, is it suffice to build the team and do that kind of programming to gain market share?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [173]

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Temporary cost, is it -- so just come again, sorry?

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Unidentified Analyst, [174]

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What is the cost on the adjusted basis? Like in Q1 FY '19, you paid some INR 14 crore of bonuses. So if I adjust for that, the employee cost has only gone up by like 3% or 4% on a Y-o-Y basis.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [175]

--------------------------------------------------------------------------------

So -- and last year, we had some special bonuses for long-standing employees and all that.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [176]

--------------------------------------------------------------------------------

But he is asking with the...

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S. L. Narayanan, Sun TV Network Limited - Group CFO [177]

--------------------------------------------------------------------------------

Or you were adjusting that result?

--------------------------------------------------------------------------------

Unidentified Analyst, [178]

--------------------------------------------------------------------------------

Yes, yes.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [179]

--------------------------------------------------------------------------------

Adjusting (inaudible).

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Unidentified Analyst, [180]

--------------------------------------------------------------------------------

Trying to increase the market share, doing a lot of new things, taking a lot of new initiatives, so still, we don't see that kind of employees (inaudible).

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S. L. Narayanan, Sun TV Network Limited - Group CFO [181]

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I'm not sure if that number is -- anyway, we'll look at it because the 3% looks very, very low. Sorry, I mean we should be having this data, but we don't. But I don't think that number is right, but we will -- but in any case, we are actually adding -- I mean, we've got a lot of professionals who have domain expertise in terms of fiction, nonfiction. We've got people work in various markets. So we are building a very strong content team. So that's happening parallelly (inaudible).

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Operator [182]

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We'll take the next question from the line of Sanjay Chawla from JM Financial.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [183]

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I just had a follow-up question on the movie release which happened this quarter in April. You mentioned approximately you need the INR 30 crore cost has been approximately allocated reflecting in this quarter. So my question is that movie is yet to premiere on your TV, on the broadcasting side, so how much cost of the total budget is already reflecting and how much it could potentially reflect when you premiere it on TV?

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [184]

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The satellite rights allocation is something available, INR 5-odd crores.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [185]

--------------------------------------------------------------------------------

So INR 30 crore out of INR 35 crores is reflecting, so roughly 85% is allocated to theatrical.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [186]

--------------------------------------------------------------------------------

Yes. Yes.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [187]

--------------------------------------------------------------------------------

Okay. And sir, I wanted to get this clarity. I didn't pick up this point. You said INR 150 crore investment is planned for OTT. So this is all what period and what kind of content do we have in mind?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [188]

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This is -- to be done between now and the next financial year. So we think we'll spend about INR 150 crores over the next 18 months, 18, 19 months. We are wanting to now put some things onto Sun NXT which would appeal to people who are watching content on the go. So that's what -- it may not be the kind of big budget stuff which is very expensively produced shows, but it will be more on the short format content which is good to watch on mobile on the go with iPad, that kind of stuff. So that's what we are planning.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [189]

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Sir, this is all content investment, and you're not referring to content technology and marketing together?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [190]

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No, no, no. This is all on software, software, yes, with production houses.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [191]

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Right. And when it's a short format content, this is basically original content that you are looking at?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [192]

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Original content, absolutely. This has got nothing to do with planning the engineering. It is all for payment to directors, scriptwriters, producers, actors, sets, all put together.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [193]

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It doesn't include the digital rights for movies that you might acquire for that content?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [194]

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No, no, no. That -- it's got nothing to do with that because today, whatever we are buying, we are buying along with satellite rights. We're also buying the digital rights. So there's nothing of that. This is pure content investments.

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Sanjay Chawla, JM Financial Institutional Securities Limited, Research Division - Research Director [195]

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So would it all reflect in the P&L, because then I guess your margins could get impacted negatively because I'm not sure the revenue level from the OTT is going to exceed that?

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S. L. Narayanan, Sun TV Network Limited - Group CFO [196]

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Correct. I mean it will not be accretive. So that's the reason why we waited this long because today, we are at a stage where we are actually making some decent sums of money, and we expect that figure to go up. So we would at best be cash neutral is what I understand.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [197]

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Yes, yes. So that's what I said, like what SL said sometime back, you just wait for some announcements like where we will be announcing some deals -- big deals with the telcos and the OTT player. The whole idea is to actually plow back those additional incremental revenues in creating regular (inaudible) content. So then I think we can further monetize those. So I think we will try and neutralize this impact and not really put a big ball to the P&L.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [198]

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In terms of the timing, it is coinciding with this. But Sanjay, actually, even if margins come down, if -- on the aggregate, if our top line grows and, aggregate, our bottom line grows, we shouldn't worry too much about margins because most important today is to get the growth back.

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Operator [199]

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That was the last question. I now hand the conference over to the management for your closing comments.

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S. L. Narayanan, Sun TV Network Limited - Group CFO [200]

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So thanks, everybody. In fact, I may have sounded a bit downbeat as I opened the thing, but we are committed to doing our best to bring the mojo back. So whatever be the condition of the overall economy, we have to do better than the rest, and we remain committed to that. Thank you.

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V. C. Unnikrishnan, Sun TV Network Limited - CFO [201]

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Thank you.

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Rajaraman Mahesh kumar, Sun TV Network Limited - President, MD & Additional Director [202]

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Thank you. Thanks.

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Operator [203]

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Thank you. Ladies and gentlemen, on behalf of Axis Capital, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.