After four straight quarters of revenue and net profit decline on a year-on-year (y-o-y) basis, Sun TV Network Ltd's December quarter financial performance was a positive surprise, beating Street expectations. Double-digit growth in advertising compared with single-digit growth in the first half of the fiscal year boosted performance. Subscription revenue rose 16%, reflecting the full impact of the Arasu deal.

Sun TV's revenue in the December quarter rose by 14% over the same period last year to Rs.486 crore. In comparison, in the September and June quarters, revenue had fallen by 4% and 6%, respectively. In the December quarter, advertising revenue increased by 20% to Rs.293 crore. It naturally looks far better than the 4-5% growth seen in the past two quarters. Of course, the past quarter was helped by a lower base, festive season impact and higher advertising spending in many sectors.

Although net profit increased by 13% to Rs.190 crore, operating performance deteriorated. Operating profit margins declined by 280 basis points on a y-o-y basis to 77.4%. A basis point is 0.01%.

All components of cost increased at a relatively faster pace. What offers comfort though is operating margin in the three months ended December was better than the preceding two quarters.

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