MUMBAI: Viacom18, the joint venture between Network18 Group and Viacom, has posted a third straight quarterly loss as operating expenses have surged 47 per cent mainly on account of launch of new channels.

The company, which runs a clutch of entertainment channels including flagship Hindi general entertainment channel Colors, widened its net loss to Rs 532 million for three months ended December, versus a profit of Rs 460 million in the year-earlier period. In the first two quarters of this fiscal, it had slipped into the red with a net loss of Rs 10 million and Rs 284 million.

Operating expenses jumped to Rs 4 billion for the quarter, from Rs 2.72 billion a year ago. Marketing, distribution and promotional expenses made a big leap from Rs 450 million to Rs 926 million. The main trigger in this was an expense of Rs 200 million incurred from the launch of Sonic, Comedy Central and Colors HD. The launch cost and operating loss from new channel History TV18 amounted to Rs 250 million.

The positive thing is that the television business has stayed operationally profitable, primarily led by Colors. The operating profit from this segment has, however, narrowed to Rs 385 million, from Rs 520 million in the year-earlier period.

The movie business suffered an operating loss of Rs 739 million compared to Rs 200 million in the trailing quarter. In the year-ago third quarter, the company had stayed dormant on the movie front, taking an operating loss of just Rs 20 million.

Viacom18 said it has incurred a one-time expense of Rs 390 million in relation to the deferment of the Hindi movie channel. It has also taken write-offs at TIFC (The Indian Film Company) of Rs 146 million.

Overall, the company?s operating loss was Rs 355 million for the quarter, reversing from an operating profit of Rs 510 million a year earlier.

Says Network18 Group CEO Sai Kumar, "During the last quarter, our profits from continuing operations were offset by largely one-time costs incurred towards investments in the expansion of our television channel portfolio and the conscious impairment of our film library given the deferment of our Hindi movies channel. We strengthened our television stable further with launch of new services such as History TV18, Sonic and our HD bouquet comprising Colors HD, History TV18 HD and CNBC-TV18 Prime HD."

The spike in expenses overrided the growth in operating revenues which swung higher to Rs 3.65 billion for the fiscal third quarter compared to Rs 3.23 billion a year ago.

The television segment reported a revenue of Rs 3.54 billion (from Rs 3.23 billion a year ago) while the motion picture arm pocketed just Rs 109 million.

Adertising could continue to show a sluggish trend for the next few months. Says Kumar, "It has clearly been a sluggish phase for the industry as a whole. Advertising revenues continue to exhibit lacklustre growth and may continue at the same pace over the next few months. Our subscription revenues, however, are on track as projected."

MUMBAI: Broadcasters continue to pay steep for acquiring telecast rights of movies that they prize. Competition in the genre is also ensuring that they catch these movies ahead of their box-office release.

Multi Screen Media (formerly Sony Entertainment Television India), a traditional high spender, has recently acquired the rights of hit movie The Dirty Picture, which is still running on cinema theatres, and two yet-to-release films, Ek Tha Tiger and Talaash.

Industry sources said MSM paid Rs 140 million for The Dirty Picture but the price for the other movies could not be ascertained.

The company, which runs Hindi general entertainment channel Sony Entertainment Television (Set), Sab and Hindi movie channel Max, has also acquired the rights of Ladies Vs Ricky Behl. 

MSM chief operating officer NP Singh said, "Yes, we will be airing The Dirty Picture in a couple of months. Apart from that, we also have Ladies v/s Ricky Behl. And you will see Aamir Khan?s next Talaash and Salman Khan?s Ek Tha Tiger, exclusively on Sony Network." He, however, refused to disclose the acquisition cost of these movies.

The movie genre is heating up with Star Gold, Star India?s flagship movie channel, acquiring movies aggressively. Additionally, its new programming strategy of more movies and less advertisements has pushed other players to pull up their socks. As a result, the prices of movie acquisitions have not lost steam.

A top executive in a rival network said on condition of anonymity, "The movie acquisition cost is now obscenely high and it is not making business sense to acquire movies at such prices. Moreover the "bold" strategy of Star Gold is spoiling the market. If other players follow suit, we will all be in trouble. Viacom18 has also put its plan on hold because it is not a viable business model any more."

Earlier this year, Viacom18 had syndicated over 500 of its movie titles to Star India for an estimated Rs 4.5 billion.

In 2011, MSM?s other big acquisitions include Murder 2, Aakarshan and Mere Brother Ki Dulhan.