We are in transition. We, as in, the media business.

Globally, the word transition has seen much play by all sorts of media companies to explain what they are up to. Or what they are going to do next. The problem with transition though is that in its garb, everything flies. And sometimes it becomes difficult to distinguish, which is which. Like, where is the value getting created or destroyed? An often used analogy for this is changing engines mid-flight.

A case in point in the Indian media business is HT Media, publisher of the third largest English news daily Hindustan Times by circulation. The company is listed on the stock exchange, one of the very few who are.

For more than two years now, HT Media has been trying to transition, from print to a digital newsroom. It hasn’t been easy. “And that is why we want to shield [investors] from the vagaries,” Piyush Gupta, group CFO of HT Media explained to analysts in October 2017. Specifically, the reason why the company is looking to spin off many of its digital businesses into a new listed entity. “We have seen that in spite of our best effort in the first year, we were not able to turn in a profit in HT Digital Streams.”

The symptoms manifested in February last year when the company shuttered four editions and three bureaus across the country as it began to undertake drastic cost-cutting measures. It was reported that over 150 journalists were forced to resign from the company, but the real numbers are unclear. In Q2FY18, the company posted a net profit of Rs 66 crore ($9.92 million), up 113% year-on-year (YoY), despite declining advertising revenue.

One would expect that the net profit would taper off in the following quarter. But the company posted a net profit of Rs 124 crore ($18.64 million) in the following quarter, even as ad revenues continued to decline. For context, the company posted advertising revenues of Rs 451.6 crore ($67.88 million) in Q3FY18. It had posted ad revenue of Rs 452 crore ($67.94 million) back in Q3FY14. That’s four years apart. Zero change.

Turns out, even though HT Media was done with cost optimisation, it wasn’t done without restructuring its business. In the last three months, the company has made significant gains by selling off land parcels and merging and demerging its digital businesses.

*All figures in Rs crore Source: Quarterly resutls

In Q3, Gupta said that the media company sold land parcels which resulted in a one-time profit of Rs 31 crore ($4.66 million). HT Campus, a digital database of colleges which also provides preparation test papers, was merged into the parent company.

AUTHOR

Shashidhar KJ

Shashidhar has been a journalist for over six years and has worked with The Times of India, The Financial Express and MediaNama, his last assignment. He is a fine bloke, and by that, I mean unusually quiet. Over the years, Shashidhar has written on several subjects. Banking, startups and technology, media, and also financial technology. He started his career on the desk at the old lady of Boribunder. At The Ken, Shashidhar works out of Mumbai and writes on telecom and financial technology. What he really wants to talk about though is his vinyl collection.

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