How VRL News Media will benefit from Republic acquisition

Republic Media Network acquired VRL News Media's complete broadcast news division last week. The acquisition is part of a larger asset purchase of VRL Media's broadcast news division, the value of which is not disclosed.  

VRL Media, which owns the Dighvijay 24x7 news channel, which debuted in April 2017, has been relaunched as Republic Kannada. This will be the fourth channel in Republic Media Network's lineup. 

According to financial data provided by Tofler, VRL Media’s news division reported a loss of Rs 17 crore for FY22, while the entire group incurred a loss of Rs 13 crore against Rs 6.36 crore in the previous financial year.  Dighvijay 24x7 news channels’ total income for the year stood at Rs 12 crore. During the year the news channel’s advertisement revenue was Rs. 11.71 crore as against Rs.10.70 crore in the FY 2020-21 with a growth rate of 9% and had incurred an expenditure of Rs.30.57 crore which also includes the depreciation charge on fixed assets. 

According to Karan Taurani, SVP, Elara Capital, the TV category is tremendously fragmented, with over 200 TV news stations and free, making it difficult for companies to scale up.  He explained that since VRL media is one of the smaller regional broadcasters, a lot of synergies can come in from the Republic due to its big network. Since people in India do not pay for news, the only option to monetize the news genre is through advertising. 

He said, "There is fierce competition; the larger players control the lion's share of the market. They can experience a revenue increase as a result of the deal with Republic TV, as they will gain exposure to many significant corporate advertisers. As a result, they may experience some respite in terms of revenue growth and scaling up." 

Meanwhile, Arnab Goswami-promoted ARG Outlier Media Asianet News Private Limited (Republic Media Network) had reported a total revenue of Rs 362.86 crore in FY 2021-22 against Rs 283.49 crore in the previous fiscal. The media company posted profit after tax (PAT) of Rs 44.94 crore against a loss of Rs 11.41 crore in the previous fiscal. Revenue from operations for the media company for FY 2021-22 was Rs 360 crore against Rs 280.42 crore in the previous fiscal.  

These companies have not filed their FY 2022-23 financials yet. 

Experts shared that while VRL news media gets to associate itself with a big brand, Republic Media will have access to VRL media assets and properties, which will reduce the cost of production and setting up a new studio. 

According to the official press note, the acquisition of the broadcast business of VRL News Media brings with it large properties and assets. Republic Kannada will have 300 professionals, including over 100 on-ground journalists, who are deployed across all 31 districts of Karnataka, an additional stringer base of over 500 journalists, 73 cutting-edge in-house news production tools, an expansive newsroom, and multiple studio spaces in Bengaluru. 

"Republic media network is a national news channel, so the channel is loaded with advertising revenue," noted B. Sridhar, Group Director, Innocean WorldWide Communications. He said, “From an advertising standpoint, expanding into new markets will assist them to expand and project themselves as a large network."

He also feels that a lot of things would be shared across the two media networks, such as production and new ideas for marketing the channel better. 

Another industry observer on the condition of anonymity shared that Republic Media is a big network. Its channels are number one or two as per BARC India ratings. "The acquisition will help VRL Media get big advertisers along with ones which are already associated with Republic Media. In the medium to long term, potential breakeven may emerge."