TV TODAY NETWORK LIMITED PROPOSED SPEECH OF MR. AROON PURIE, CHAIRMAN AND MANAGING DIRECTOR AT THE 15TH ANNUAL GENERAL MEETING PROPOSED TO BE HELD ON: 20th AUGUST, 2014 Good morning ladies and gentlemen, It gives me immense pleasure to welcome you all to our 15th Annual General Meeting. I hope you enjoyed the films that just played. They reflect our contribution and progress as a company. The Directors’ Report and the Audited Accounts of your Company for the financial year ending 31st March 2014 have been with you for sometime and with your permission I shall take them as read. I would now like to highlight some key aspects of the year under review: Your Company’s revenue from operations has been Rs. 389 Crores compared to Rs. 312 Crores last year, an increase of 24%. Profit before tax has been Rs 93 Crores compared to Rs. 17 Crores last year, an increase of 430% over the last year. Profit after tax has been Rs.61 Crores compared to Rs. 12 Crores last year, registering an increase of 402 % over the previous year. This is an unprecedented and very commendable achievement of your Company. Your company’s business model is such that it mainly depends on Ad Revenues. Your Company, due to its impeccable reputation and leadership position of the flagship channel “AAJ TAK”, and confidence reposed by its viewers and advertiser clients and agencies, managed to achieve a superlative performance. In recognition of its top quality coverage and mass appeal, your Company’s Channels have been conferred with the following prestigious awards: - Aaj tak dominated and swept the exchange4 media’s News Broadcasting Awards with 10 awards and won the Best News Channel of the Year. - Our English Channel Headlines today was also awarded in 6 categories including the Best Continuing Coverage by a reporter, Best Public Service Campaign for a brand by a news channel and Best Channel Marketing. - Aajtak was also conferred the best Hindi news channel at the Indian Television Academy Award 13th year in a row. At the same ceremony, Aaj Tak also set a new benchmark in the events business by winning the ITA Award for Best Television Event – Agenda Aaj Tak. - Other prestigious Awards were also bestowed by leading organizations like indiantelevision.com’s NT Awards and PromaxBDA India for Aaj Tak. - Your news channels also took home the top honours, both Gold and Silver in the news category at the broadcaster Creative Abbys, Goafest. 1 AAJ TAK: Aaj Tak continued to maintain its dominant position for the 13th consecutive year. Aaj Tak remained No. 1 in 51 weeks out of 52 weeks of the year with over 18% average weekly market share; it was 29% ahead of the nearest competitor in market share. In this year, Aaj Tak led the viewership charts across all important events like State Elections and Uttarakhand Flood Tragedy. As per TAM, Aaj Tak reached around 45.6 million viewers on average every week, with the closest competitor at 39.5 mn. Aaj Tak started new programming series aimed to set the nation’s agenda with programs like Shwetpatra, 3rd Degree, Rajtilak, Halla Bol and Election Ooh LaLa with Shekhar Suman to highlight public issues and to present the voter expectations in a creative manner. Aaj Tak used different state of art technologies like drone cameras to cover state elections. Aaj Tak also established thought Leadership through events like “Agenda Aaj Tak- Mission 2014” and the Biggest Political Conclave ”Panchayat Aaj Tak”. Headlines Today: Headlines Today has grown to over 16% market share this year from 14% last year. The channel has grown with help of its focused programming like “Right to be Heard” (RTH), with its Town Hall show and the viewer centered ‘You Matter’ positioning. Towards the end of the financial year, new talent Karan Thapar was introduced to bolster the Prime Time programming. Also in 2013-14, Headlines Today went on to break the barrier and become no. 2 rank for 16 weeks this year up from just 3 times last financial year. A Flagship event around Sachin Tendulkar’s retirement was a unique tribute ‘Salaam Sachin’ driven by Headlines Today. TH season 2 coincided with Elections Programming towards the end of the year. RTH Election Express state of the art mobile studio kick started a new form of elections coverage championing the Real Issues from Real People across the country. Tez: Tez adorned a new positioning cutting the clutter of Boring News Channels by becoming the clear well rounded positive alternative. ‘Boring News Khallas’ became the new DNA driving this unique offering. In fact, Tez enjoyed a Time Spent Per Viewer of 26 minutes weekly in Mumbai which was higher than Z news, IBN7, NDTV India and News 24. Dilli Aaj Tak: Dilli Aaj Tak maintained its differentiated offering by being the unique Delhi/NCR focused 324 hrs news channel with the tag line “Aap Ka Shehar Aap Tak”. Infact on the Sunday of Week 50, the Counting Day of State Assembly Elections, Dilli Aaj Tak had even beaten IBN7 and NewsNation in Delhi by a convincing margin. Your Company’s channel Aaj Tak and Headlines Today, continue to be well received in the UK and US Market as well. INDIAN TELEVISION BROADCASTING INDUSTRY The television industry in India is estimated at INR 41,700 crore in 2013, and is expected to grow at a CAGR of 16 per cent over 2013-18, to reach INR 88,500 crore in 2018. Aided by digitization and the consequent increase in Average Revenue Per User (ARPU), the share of subscription revenue to the total industry revenue is expected to increase significantly in the coming years. While Digitization of cable saw the television industry on the path of progress with varying degree of success across geographies, the real benefits of growth in subscription revenue and 2 decline in carriage fee are expected to be realised much later than expected. Large networks appeared to have witnessed a 15-20% growth in their subscription revenue but this is much lower than expectation. Broadcaster-MSO arrangements continue to be based on fixed fee arrangements largely. Subscription revenue is expected to be the driver of growth for broadcasters, growing at an estimated CAGR of 26 per cent from 2013 to 2018. Increase in the declared subscriber base and higher revenue share is expected to drive up the share of subscription to total broadcaster revenue from 34 per cent in 2013 to 46 per cent in 2018. OPPORTUNITIES AND THREATS Television: TV broadcasting market generated INR 13,600 crore as advertisement revenue which was 67% of the total revenue generated by the broadcasting industry. The share of advertising revenue is projected to decrease over the coming years due to an expected surge in subscription revenues owing to digitization. Also, it would facilitate the launch of many niche channels as the dependence on advertising would be minimized. Due to the immense popularity of the channels, your company during the year under review was able to generate revenue from subscription over Rs. 33 Crores. News channels have not really been the beneficiaries of this decline in carriage fees due to fragmentation and lack of any real differentiation. Also, in the near term, there is a risk that decline in carriage fees in digitised regions may be offset by an increase in carriage fee paid for LC1 markets since TAM has extended its reach to include the LC1 markets and broadcasters may want to ensure visibility in these markets. The supply-demand situation to carry channels will improve significantly post digitisation, and therefore on an overall basis, the payout towards carriage fee is expected to decline further over the next three years, and improve for news channels too. The threat of the ad cap along with other TRAI recommendations is worrisome and we along with the NBA have taken appropriate legal action. FM Radio: The radio industry outperformed all other traditional media segments by clocking a growth of 15 per cent. The rollout of phase III would provide a boost to broadcasting regional media content. Advertisers would also have additional avenues to take their brands to consumers through phase III of radio. In addition to more licenses, the industry is hopeful that regulations pertaining to the networking of content and multiple station ownership in one market are also revised. The proposed introduction of news content on private FM Radio channels is also awaited and will be an opportunity for us. CORPORATE GOVERNANCE The Companies Act 2013 has also brought in lots of compliance requirements and new concepts for the companies. Our Company is complying with new requirements of the SEBI listing agreement aligned with Companies Act 2013. 3 DIVIDEND Your directors have recommended dividend @ 20% (Rs 1.00 per equity share of Rs 5/- each) for the financial year 2013-14 also for your approval. The outgo on dividend and Corporate Dividend Tax will be Rs. 5.95 Crores and Rs. 1.01 Crores. FUTURE OUTLOOK The Management is focussed on delivering superior results and barring unforeseen circumstances, your Directors are confident in this regard. I strongly believe that we enjoy a robust foundation that will support growth of our business. I intend to continue to leverage this solid platform to achieve our aspirations and deliver value to our stakeholders. During the journey, I look forward to the continuing support of our shareholders, who have reposed their faith in the Board and in the management. The confidence of you, the shareholders, has been a considerable source of strength for us at TV Today Network. The road ahead is filled with challenges and opportunities.