Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
General

Network18 lays off 350 more

From Suchetadalal.com:

Media and entertainment company Network18 Media and Investments Ltd, which has been pumping money into its cash-strapped, loss-making businesses to keep them alive, is finally taking a call on the situation. According to sources, the media company has laid off about 350 employees, mostly technical and production employees from its Web operations. It (the layoff) also includes some journalists, the majority of whom have now joined Zee Business.

According to a source, who wishes to remain anonymous, the company has not offered any increment this year. Even its Web-based commodities operations employees have not received any increment since the last one-and-a-half years, the source added. Network18 has also reportedly closed its technical analysis beat from the Web operations of moneycontrol.com and wants to outsource the same to cut costs.

In November too, Network18 laid off around 200 permanent employees as part of a restructuring exercise aimed at merging broadcast operations of its Hindi and English business news channels. According to a filing by the company to the Bombay Stock Exchange, the ‘one time’ restructuring cost it Rs4.50 crore on account of rationalising the workforce.

Hat tip: Kaushik Gala.

Web 18 Financials have been pretty bad:

image

Medianama has some gory internal details of the firings: Severance of two months, immediate fires, layoffs in all verticals of Web18.

This was to be expected. The financials show continuous bleeding and while at Moneyoga I would wonder constantly how anyone could ever hope to compete in the space, when the leader was continuously making losses. The bubble in the media and internet space is still strong, so the Network18 group has been able to continously raise money to fund such losses, and still stay strong. The network 18 financials (across all sub-companies) have also been difficult:

image

  • Although losses are still high, the revenue increase is a good sign.
  • EPS is shows very strange growth, and the income streams are very strangely intertwined. A good portion of revenue is internal – i.e. between companies it owns; for example, 10% of its last quarter revenues was inter-company revenue.
  • The holding patterns are strange – Web18 is held as majority owned by TV18 (another public co) and 13% by ibn18(yet another public company), both of which are owned partly by Network18. This is a maze of companies that can only confuse investors. I am VERY wary of companies that choose confusing investment structures.
  • The company  is very aggressive on media channels and is the giant of the financial media space. It deserves some premium for its size, the brand and the first mover advantage.
  • At Rs. 100, the market cap of Network18 is 1100 crores. That’s about 1x annual sales, and might be a good place to buy if the company does turn around. But it looks like investors might not be patient enough; the stock meanwhile hasn’t done too much in the last few months.

image

Disclosure: No positions

Like our content? Join Capitalmind Premium.

  • Equity, fixed income, macro and personal finance research
  • Model equity and fixed-income portfolios
  • Exclusive apps, tutorials, and member community
Subscribe Now Or start with a free-trial