Improved radio performance and lower capital advances are key positives to our rating of Sun TV. Performance of radio subsidiaries Kal Radio and South Asia FM improved significantly with combined revenue growing ~25% y-o-y to R113 crore and posting minorities PAT of R10.85 crore versus a loss of R6.54 crore in FY12. Capital advances declined ~45% y-o-y to Rs 208 crore (vs 3x increase in FY12), likely reflecting lower advances towards movie acquisition.
Subscription revenue from Sun Direct DTH declined 3% y-o-y to Rs 178 crore, implying a fall in its contribution to 48% of Sun TVs DTH revenue in FY13 vs 55% in FY12. Overall DTH revenue for Sun TV grew 12% y-o-y, indicating a strong 30% y-o-y growth from other DTH operators.
Business momentum for Sun Direct likely remains weak as indicated by decline in revenue contribution as well as lower advertising on Sun TV Network (down from Rs 26.4 crore in FY11 to Rs 9.7 crore in FY12 and Rs 20 lakh in FY13). Receivable days for revenue from Sun Direct have increased from 118 days in FY11 to 200 days in FY12 and 205 days in FY13.
Cost of revenue increased 54% y-o-y to Rs 155 crore, led by higher costs related to program production and programme rights.