Sun TV Network Limited (SUNTV) Q2 2022 Earnings Call Transcript

Sun TV Network Limited (NSE: SUNTV) Q2 2022 earnings call dated Nov. 08, 2021

Corporate Participants:

S.L. Narayanan — Group Chief Financial Officer

V.C. Unnikrishnan — Chief Financial Officer

R. Mahesh Kumar — Managing Director

Analysts:

Ankur Periwal — Axis Capital Limited — Analyst

Abneesh Roy — Edelweiss — Analyst

Arun Prasad — Spark Capital — Analyst

Sanjesh Jain — ICICI Securities — Analyst

Mohit Kumra — Kumra Investment Company — Analyst

Yogesh Kirve — B&K Securities — Analyst

Kirti Doshi — Antique Broking — Analyst

Sunny Gosar — MK Ventures — Analyst

Siddhartha Bera — Nomura — Analyst

Aliasgar Shakir — Motilal Oswal — Analyst

Jiten Doshi — Enam Asset Management — Analyst

Nitin Sharma — Moneycontrol Research — Analyst

Presentation:

Operator

Ladies and gentlemen good day and welcome to the Q2 FY Earnings Conference Call of Sun TV Network Limited hosted by Axis Capital. [Operator Instructions]

I now hand the conference over to Mr. Ankur Periwal from Axis Capital Limited. Thank you, and over to you, sir.

Ankur Periwal — Axis Capital Limited — Analyst

Yeah. Thank you, Jacob. Good afternoon, everyone and welcome to Sun TV Network Limited’s Q2 and H1 FY ’22 earnings call. As usual, from the management side, we have with us with Mr. R. Mahesh Kumar, Managing Director; Mr. SL Narayanan, Group CFO; and Mr. VC Unnikrishnan CFO.

SL, over to you, if you would like to add some initial remarks?

S.L. Narayanan — Chief Financial Officer

Outset — belated good wishes for Happy Diwali to all people logged in, and unfortunately we couldn’t have this on Friday evening, because a lot of analyst friends that requested us to defer this in view of the holidays, and that’s why we had to delay this. I think some people were not informed on time. My apologies for that delay.

Before we get into the Q&A, I just wanted to mention that we have had an extraordinary amount on finance charges, which has been disclosed in the notes to the accounts. That relates to an income tax assessment item. Barring that, the company continues to be debt free. I just wanted to clarify this. It is not exactly finance charges, more related to an income tax assessment.

Over to you, Ankur, and let Q&A start and you can use the remaining one hour for questions and answers. Thanks.

Ankur Periwal — Axis Capital Limited — Analyst

Sure SL. Jacob, can we please start?

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead.

Abneesh Roy — Edelweiss — Analyst

Yeah, thanks for the opportunity. My first question is on the movie pipeline, and Rajnikant movie, which is doing really well. So congrats on that first. So you had mentioned in Q1 call that, you will be mentioning the release pipeline of the five major movies, once the environment is favorable. So, could you clarify how is the timetable looking, for the balance of the movie?

S.L. Narayanan — Chief Financial Officer

In fact, things are looking pretty good, Abneesh. The next, in the line of releases is movie starring Suriya, and after that there is a movie starring Vijay. And after that is one starring Dhanush and then Vijay Sethupathi. So we have a fairly strong pipeline of movies, and it’s still early days, but the first three days collections of Annaatthe have been extremely heartwarming, and we look to this quarter with great confidence on the back of that release.

Abneesh Roy — Edelweiss — Analyst

So SL, one follow-up on Annaatthe, so when you compare pre-COVID industry in the South India versus now, if you could clarify in terms of how the key numbers are in terms of restrictions, are there any issues? And when do you see full normalcy for the industry?

S.L. Narayanan — Chief Financial Officer

See, we had a restriction, in the sense that only 50% of the movies were allowed — movie capacity was allowed, till about October. Effective 1st of November, they have increased it to 100% seating capacity. So in that sense, it’s almost back to normalcy. But what is not yet normal, is the kind of frequency of releases. So, I think very few movies got released in the theatrical system, and most were on the OTT format, even though there were regular feature films, they were released on OTT because of the restrictions. But now I think, one by one movies will start hitting the theaters and one of the reasons why this is done very well is, there is, like they said, revenge tourism which is taking up all the rooms in hotels, there’s almost like a vengeance which is driving families to the multiplexes. And that’s good for the trade, as well as producers like us.

Abneesh Roy — Edelweiss — Analyst

Sure. My second question is on the OTT. You had mentioned on the OTT original content, you will share the plans, once normalcy comes. Now fair bit of normalcy has come, in fact it’s the other way around, if crowd is going towards multiplexes in terms of revenge consumption, what would be your plans, because now OTT will be again back to pre-COVID. In the COVID era, OTT saw very high interest from viewers. But now as people go back to offices, go back to multiplexes, what will be your plan for the OTT, original content?

S.L. Narayanan — Chief Financial Officer

See OTT is definitely a very key constituent of the overall revenue mix and the strategy for Sun. But as I mentioned, even in the last call, the priority is to get the current projects completely tied up and taken off, before we start getting into production of original, because there will be only so much that we can do, in terms of content creation. Right now, there is a lot of focus on completing the movies. In fact, we’ve also tied up with a very famous Tier 2 actor, Sivakarthikeyan. So there is lots of content which is coming, and we have seen that, every time a new movie premieres on Sun NXT, it really turns out to be a shot in the arm for subscriptions. So in the remaining part of the year, up to March of 2022, I don’t see as beginning anything afresh on OTT. It is going to be movies, but we do believe that these movies are going to take the Sun NXT subscription base to a different level.

Abneesh Roy — Edelweiss — Analyst

So one last follow-up SL, in Q1 call, you had mentioned OTT originals will be ramped up immediately post the normalcy returns. Now you are saying that till Q4, priority will be movies. So movies were there earlier also.

S.L. Narayanan — Chief Financial Officer

Yes.

Abneesh Roy — Edelweiss — Analyst

So is that — right now…

S.L. Narayanan — Chief Financial Officer

So the thing is, we couldn’t complete everything on time, because of the restrictions on all the of the number of people, who can be allowed for shoot and all that. I mean the whole thing was in a state of flux. So we believe that at least for the next five months, which is November through to March, I don’t see us starting anything. There is a lot of discussions happening. There is a lot of ideas getting presented to the team. But I don’t see us spending any significant sums of money on OTT, at least till March.

Abneesh Roy — Edelweiss — Analyst

Sure. That’s all from me as well. Thanks a lot and all the best. Thank you.

S.L. Narayanan — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Arun Prasad from Spark Capital. Please go ahead.

Arun Prasad — Spark Capital — Analyst

Thank you. Thank you for the opportunity. Sir, my question is on subscription revenue. If you take our first half number and compare against FY ’20 first half, which had — obviously had a — was a very good year in terms of subscription revenue. So this year, our staff [Phonetic] number is — be around 2 percentage, as compared to first half FY ’20. So not much growth. So would you still retain your earlier guidance for subscription revenue that the growth will be much higher than that or this is a new normal?

S.L. Narayanan — Chief Financial Officer

See, we have had a situation in subscription, which is because of the uncertainty on some of the contract renewal, and that’s the reason why it seems like the growth has tapered off. But I can tell you that in the past also, we had similar situations. Two distributors turned out to be somewhat sticky, so we had stopped recognizing revenues provided for doubtful debt. But then, we were able to collect it, and so that’s the reason why you were seeing some base effects also this year. We also had one international distributor, who was running into a little bit of difficulty. So some of the payments were delayed. So in the recent quarter, we have not recognized revenues from that large distributor. But we do believe that starting quarter of December, we will see some of these catch up revenues hitting us, and also some of the revenues that we will start recognizing from sale of some of these digital rights and OTT contracts. So I don’t see this as a major issue. We will still be able to post decent double-digit growth on subscription for the full year.

Arun Prasad — Spark Capital — Analyst

All right sir. So this, this, we can really — we can start from the second half itself or is it like, again…

S.L. Narayanan — Chief Financial Officer

Correct, correct. It is as early as — early as, there will be some uptick in the run rate, and I’m sure that that will continue

Arun Prasad — Spark Capital — Analyst

Understood sir. Sir, my second question is on the Bangla genre. So that is — so what is the current margins or cash burn in that geography, and when do you see that turnaround? And can you build similar trajectory for Marathi also?

R. Mahesh Kumar — Managing Director

So Bangla — this is Mahesh. So Bangla basically is now out of the initial investment and cash burn phase. I think they are more or less at the breakeven level now. And we are seeing good traction in the overall rating numbers, and now the bounce back in the ad spend, we are seeing good traction in the ad revenues. So I think in the next financial year, we should see Bangla making money or breaking even.

So Marathi is still early. We have not even got the first couple of weeks rating. But I think we also feel that market will take two, three years for us to at least break even in that market.

Arun Prasad — Spark Capital — Analyst

Okay, all right, sir. That’s it from me. Thanks. Thank you very much.

Operator

Thank you. [Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities. Please go ahead.

Sanjesh Jain — ICICI Securities — Analyst

Good afternoon, sir and festival greetings to everybody. Thanks for taking my question. Couple of them; first, can you start with giving us the breakup on the revenue and the depreciation/amortization for this quarter?

S.L. Narayanan — Chief Financial Officer

Yes. Online advertisement revenues INR342 crores. Broadcast revenues around INR2 crores. International is INR25 crores. Pay channel revenue is INR193 crores. DTH, INR215 crores, IPL is INR52 crores, and on the depreciation, it is INR26.49 crores and amortization is INR8.99 crores.

Sanjesh Jain — ICICI Securities — Analyst

INR26.4 crores and INR8.99 crores. Got it. Thank you. Thanks for this disclosure. Couple of questions, first on the subscription side; how do we see the impact of NTO 2.0 implementation and when do we see Sun completely adopting the NTO 2.0 or moving to the NTO 2.0 adoption?

V.C. Unnikrishnan — Chief Financial Officer

Actually, all of — all the broadcasters have announced the new prices as per the NTO 2.0 regime. So that’s there in the public domain. So the TRAI, as per the regulation has given 45 days’ time for the DPOs to implement on the ground. So like we had mentioned in the past, as far as we are concerned, we are not seeing any major impact on the revenue. Like completely everybody across the board has moved in main line DNC [Phonetic] and the most popular channels out of the bouquet, and they have priced it much higher than the price cap of INR1 [Phonetic]. So, more or less, we have also adopted the same strategy. So unless there is any postponement on the implementation, it will get implemented [Indecipherable] end of December.

Sanjesh Jain — ICICI Securities — Analyst

Got it, sir. Got it. Thanks for that update. On the advertisement side, this quarter looks like we have done better than the pre-COVID level. In a time where the FMCG is seeing significant pressure on the raw material, can you give us a color on what is driving national versus — local versus national advertisement, and which are the sectors which are driving this growth?

V.C. Unnikrishnan — Chief Financial Officer

Yeah, we are seeing a very good traction from the retail. So this quarter we have seen a big bounce back on the retail front. There has been little bit of pressure from the FMCG. If you want a complete breakup, FMCG is about 50%, 55%; e-commerce 10%, retail 8%, pharma 5%, auto 4% and others 18%.

Sanjesh Jain — ICICI Securities — Analyst

And so we have seen a fair bit of — as we said, some bit of pressure on FMCG. So which is a sector which is compensating for the FMCG pressure? Is it e-commerce, retail…

V.C. Unnikrishnan — Chief Financial Officer

Relative to last year — we are seeing good traction from the e-commerce front. Retail have also grown by — relatively 40%, 50% as compared to what it was pre-COVID. What we have seen is a trend, which probably you will witness is, a lot of the new gen companies which are either planning for an IPO, or are sitting on IPO money, are actually spending huge on the advertisement, like BYJU’S, Zomato, and a lot of other new e-comm guys like Paytm and all. So we are seeing huge traction, and answering [Phonetic], related to month-on-month, for this quarter we have reported close to 40% growth, but if you look at September and October, it has been a record-breaking revenue for us.

Sanjesh Jain — ICICI Securities — Analyst

Okay. So the run rate should continue even in the 3Q? So for the full year how do we see the advertisement revenue in that sense, vis-a-vis FY ’20 numbers, should be double-digit advertisement growth for this year?

V.C. Unnikrishnan — Chief Financial Officer

Because I think the first quarter has been pretty bad, we have seen a huge dip in Q1, so as of now six months we are minus 19%. We are just working and hoping that we are at least neutralizing that over the next few quarters.

Sanjesh Jain — ICICI Securities — Analyst

Got it sir. Got it. And on the non-fictional shows and then the spend on the programing cost, we have seen some increase in this quarter. It should further increase or what should be the steady state run rate on the — cost of revenue for us…

V.C. Unnikrishnan — Chief Financial Officer

I think this quarter is around INR55 crores is the total spend on the programing. I think we should be more or less in the same line. Only addition is, we have this new Marathi channel, there could be some spend on the new channel. Otherwise, INR65 crores to INR60 crores is indicated spend on programming.

Sanjesh Jain — ICICI Securities — Analyst

So this number what we have done in this quarter, should be a steady state number? We shouldn’t expect any significant increase from this number?

V.C. Unnikrishnan — Chief Financial Officer

No, no.

Sanjesh Jain — ICICI Securities — Analyst

Okay. Just one last bit on the amortization. Now that there are movie releases and we will be buying movie, right. How should we see the amortization number for the second half?

S.L. Narayanan — Chief Financial Officer

In fact, I think it has not come to normalcy. Though we are seeing some movie releases, but it is not like what it was pre-COVID. So there is no much like — for this Diwali, there are only two Tamil movies which are getting released. And what we are seeing maybe next festive say, Pongal or whatever also, we are not seeing some lineup of maybe couple of movies, only two, three movies. So that is around — yeah.

Sanjesh Jain — ICICI Securities — Analyst

Got it sir. Got it, got it. That’s it from my side. Thanks for taking the question and best of luck for coming quarter.

Operator

Thank you. The next question is from the line of Mohit Kumra from Kumra Investments. Please go ahead.

Mohit Kumra — Kumra Investment Company — Analyst

Good morning, sir. Congrats on your wonderful result. My queries are basically all regarding something very topical, which is the IPL franchise, which you own. As you are aware, somebody paid $1 billion for their franchise right now. So I wanted to ask some queries, just put like — tell us about whatever you can about it, and some of them may be very basic also, but we request you to just shed as much light as possible. Firstly, do you own your franchise in perpetuity? Second, how much did you pay for it? Third, how much do you save yearly and how much do you get out of it yearly? And finally are you allowed to spin your franchisee off within a separate company, and do you have any plans to do so? So whatever out of this sir you wish to answer or…?

S.L. Narayanan — Chief Financial Officer

I will answer all these questions. The first question is on the duration of the franchise. It is a franchise in perpetuity. So the deal that we have signed with BCCI does not have an expiry date. So this is an asset for keeps. The second is, the amount that we paid, what we paid was a license fee, which was discovered through a process, because the earlier licensee defaulted, and lost the franchise. So BCCI invited bids in September of 2012. In October 2012, the bids were opened in a meeting, and we turned out to be the biggest — I mean, the largest amount. So, we paid INR85.05 crores for a period of five years. So that was the amount that we paid. Against that, we got back some amount that was distributed by BCCI. We also made some money selling local ads. We also made money selling space on the jersey, and we made some money, sale of tickets.

So the first five years, this was loss making. If my memory serves me right, I think we made a loss of INR147 crores in those five years. But in the sixth year with the new contract kicking in, we recovered almost all of those losses. And from the sixth year onwards, we don’t pay the license fee, we only pay 20% revenue share of whatever we make, including what BCCI distributes. So in that sense, we have created an asset with zero investment, because the blocked funding of the first five years, we recovered in the sixth year, and after that it has been contributing cash flows.

Now — what was the other question that you asked? I forget? I think, I covered all the questions.

Operator

As there’s no response from the line of the participant, we move to the next question. The next question is from the line of Yogesh Kirve from B&K Securities. Please go ahead.

Yogesh Kirve — B&K Securities — Analyst

Yeah. Thanks a lot for the opportunity. So just looking at your cash flow statement and you could see the investments of about INR650 crores for the first half. So could you just give us what is the plan for the investment for FY ’22 and ’23, and it seems that the investments are getting more front-loaded. I understand lot of this would be related to the movie, if you can just shed some light on that?

S.L. Narayanan — Chief Financial Officer

Yeah, most of this is movies which are in work in progress. So in films, there is an advance element that we have to be paid, its accumulated as recoverable. So as and when collections come, it will get sorted out.

Yogesh Kirve — B&K Securities — Analyst

Sir, any sense about what could be the total investment for FY ’22 and ’23?

S.L. Narayanan — Chief Financial Officer

See, the thing is, it’s all dependent on — see today, the way movies are made, Yogesh, it’s very clear. See the top actors move in teams. So if there is a top rated actor, he has his own director, and they all have an arrangement, who is going to be the music and who is going to be. So everything gets sorted out. And then once the project comes to us, we are more like financiers. We take a call if the budget is right. Whether there is a demand for that kind of a theme. And then we finance the production. There are very clear caveats written into the agreement, how much we’ll pay upon signing, and when the next payment will happen. And then there is complete tracking of budgeted costs versus actuals. And then we do the sales, or sometimes we also directly release. Wherever there is an attractive proposition, we sell the rights and that’s it. So how many such movies will come, whether — this is also a function of availability and dates.

R. Mahesh Kumar — Managing Director

So just to add to SL’s thing, basically — typically the working capital cycle on a normal course is around nine months. This time, it has got bunched up because of the COVID situation, where we have five movies and couple of it are big ticket movies. We have seen some huge amount. Otherwise, I think like once this Annaatthe is released, you will see substantial portion of this coming down. So it is basically the — the situation where you’re seeing that number.

S.L. Narayanan — Chief Financial Officer

In fact, if you remember, Sarkar and all, you know, we completed it in about four months. But this time around, Annaatthe started pre COVID, and for almost one and half years, it didn’t move at all. As and when shooting comes, and we have to keep paying money to the artists and things like that. So that’s what we have seen. But to answer your question Yogesh, since we have the contacts with the ecosystem and we are a reputed production house, with a reputation for prompt payments and all that, all these projects as a matter of growth comes first to us, and wherever — I mean, a guy like Mr. Rajnikanth, I mean, it’s a no-brainer, because the movie will be sure shot hit, because everybody goes to watch Mr. Rajnikanth. So similarly for other top stars like Ajit or Vijay or Suriya, Vijay Sethupathi, so whenever we get these projects, the only thing that we need to look for is, whether we have the management bandwidth to manage several such projects at the same time, which is why it gets sequenced. But as luck would have it, because of this COVID thing, we had a lot of these things, which have got into a work in progress situations. But I think the next four, five months, it will all get sorted out.

Yogesh Kirve — B&K Securities — Analyst

Okay, appreciate the response. Just only one thing, which if we can set aside the movie production, if you can keep movie production aside, because it has been lumpy. So what are the other investments we have in our mind, in terms of the satellite rights, acquisitions?

S.L. Narayanan — Chief Financial Officer

See, satellite right, these things go back to complete normal. Everything gets opened up and COVID related hospitalizations or casualties gets completely out of — I mean, it completely comes to zero. And we go back to the way we were living in February 2020, I think we will be buying at least INR450 crores to INR500 crores worth of movies, and factoring in some inflation.

Yogesh Kirve — B&K Securities — Analyst

Okay. And this would also — this INR450 crores to INR500 crores would also include our own movies right, or that would be on top of it?

S.L. Narayanan — Chief Financial Officer

No, no, no, no, no, this is only satellite rights.

R. Mahesh Kumar — Managing Director

To the portion of the satellite, that will [Indecipherable].

S.L. Narayanan — Chief Financial Officer

Yeah, yeah. Correct. Correct, correct.

R. Mahesh Kumar — Managing Director

Assigned from [Speech Overlap].

S.L. Narayanan — Chief Financial Officer

Yeah. Yeah. Correct, correct.

Yogesh Kirve — B&K Securities — Analyst

Right. So the second question related to the dividend. So we had — first quarter, we announced about 3.75% and now we have 2.5%. So on a combined basis, it works out to about — the payout of roughly about 30% odd. So they would be planning right, to go back to what historical raise that we had, right 50%, 60%. So any update regarding that?

S.L. Narayanan — Chief Financial Officer

See, we have consistently been saying about 50% plus. I don’t see any reason why we will go back to a different style of distribution. So barring unforeseen circumstances, I see us being at least a 50% payout ratio.

Yogesh Kirve — B&K Securities — Analyst

Okay. And finally, a quick update related to Marathi. So any sense about what could be the losses during the initial stages [Phonetic]? Would it be comparable to what we’ve seen in the Bengal or Bangla or it could be lower or higher, any sort of…

V.C. Unnikrishnan — Chief Financial Officer

It will be very similar to Bengal. So I think overall and over the next three years, the net investment of — key cash flow could be approximately INR100 crores.

Yogesh Kirve — B&K Securities — Analyst

Okay. Thanks a lot for the responses and wish you all the best.

S.L. Narayanan — Chief Financial Officer

Thank you.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Mohit Kumra from Kumra Healthcare [Phonetic]. Please go ahead.

Mohit Kumra — Kumra Investment Company — Analyst

I asked that question about the IPL thing, my phone got cut off in between. Sir, I heard a part of your answer, I just want to know whether you answered the final part about an IPO or a spinoff being allowed in that part of your business, and if you have any plans to do so in the future?

S.L. Narayanan — Chief Financial Officer

See, I can’t say never, but at this point in time, we don’t have a plan. I mean, you also asked another question, what happens with the sale [Phonetic]? Definitely it is saleable, in fact one transaction has already happened in the case of Delhi Daredevils, where the GMR Group I think divested in favor of the Jindal Steelworks Group. So, but at this point in time, Sunrisers is a division of Sun TV Network Limited and we disclose the revenues and costs every season. But I’ll be — I just can’t say, that we won’t do any spinoff or listing it separately. If there is a way in which a value unlocking can be done for the benefit of shareholders, we will certainly look at it at the appropriate time. But at this point in time, there is nothing.

Mohit Kumra — Kumra Investment Company — Analyst

Okay, sir. Sir, one final small thing is that in an average normal year, because we haven’t had an average normal year for the past two years now. What is the income on an average year, when the whole season takes place and everything happens?

S.L. Narayanan — Chief Financial Officer

See if COVID hadn’t hit us, I think it could have generated close to about INR200 crores in PBT.

Mohit Kumra — Kumra Investment Company — Analyst

Okay. On an average year, on a normal year?

S.L. Narayanan — Chief Financial Officer

Yes. Yeah, yeah.

Mohit Kumra — Kumra Investment Company — Analyst

And sir, one question on a slightly different, all these movies you produce, for example, Annatthe and all, these are produced under the header of Sun Pictures, this is a unit of Sun TV…

S.L. Narayanan — Chief Financial Officer

Yes, it is a part of Sun TV Networks.

Mohit Kumra — Kumra Investment Company — Analyst

Like Sunrisers [Speech Overlap].

S.L. Narayanan — Chief Financial Officer

It is a division of Sun TV Network Limited.

Mohit Kumra — Kumra Investment Company — Analyst

Okay. Okay. No, I thought — nothing like that, it is a division of the company.

S.L. Narayanan — Chief Financial Officer

It is not a separate company.

Mohit Kumra — Kumra Investment Company — Analyst

Thank you.

S.L. Narayanan — Chief Financial Officer

All revenues and costs of movie production is captured in the Limited entity.

Mohit Kumra — Kumra Investment Company — Analyst

Thank you so much. Thank you.

Operator

Thank you. The next question is from the line of Kirti Doshi from Antique Broking. Please go ahead.

Kirti Doshi — Antique Broking — Analyst

Sir. My question has already been answered on the IPL listing or the demerger. Thank you for the opportunity.

S.L. Narayanan — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Sunny Gosar from MK Ventures. Please go ahead.

Sunny Gosar — MK Ventures — Analyst

Yeah. Thanks for taking my question and congratulations on an encouraging set of advertisement numbers in the quarter. I have two questions. First one being, in terms of the positive momentum that you are seeing in the ad revenue, do you believe that you can go back to the peak revenue that we achieved in FY ’19, say at about INR1,500 crores by FY ’23. Basically any guidance or color on that, will be very helpful?

R. Mahesh Kumar — Managing Director

I think what — like I had mentioned, what we are seeing in terms of ad revenue growth month-on-month, we are seeing phenomenal traction in the ad revenue. I think we have actually booked some record revenues in the month of September. So if this momentum continues, we really don’t know, because there should not be any third wave of COVID etc. If this momentum continues, then we are hopeful that I think we will be able to break all past records.

Sunny Gosar — MK Ventures — Analyst

Right, right. Sure. And basically — my second question is, with relation to the business model that we follow for the movie production. So basically, how does this work? Is it like our profits are linked or do we earn a fixed amount by selling the rights to a distributor? And like what business model are you planning to follow for the current pipeline of moves that we have?

R. Mahesh Kumar — Managing Director

It’s a mixed bag. There are certain territories where we sell on a minimum guarantee. In fact all profits go to the distributor who purchases those rights. And he makes money, along with the exhibitor. There are certain other territories, where we do make the sale to a distributor, but there is — apart from the minimum guarantee, there is also profit sharing, if the collections exceed a certain level. And there are certain territories, where we directly release, when we are sure about the performance of the of the product, we have direct releases to the exhibitors, and we do the collections directly, where our profitability margins are the highest. But obviously, we can’t do this for markets like say Delhi or Bombay, because we don’t understand those markets as well as we do, in the city of Chennai or maybe the city of Coimbatore. So it’s a very diversified mix of business models. But balances risk with the opportunities for high margins.

Sunny Gosar — MK Ventures — Analyst

Sure, sure. Sure. And I have one last question, basically if you look at our receivables — in receivables, overall, have continued to increase for the last [Technical Issues] basically, the most [Technical Issues] because in terms of the receivables, [Technical Issues] flattish revenue.

S.L. Narayanan — Chief Financial Officer

You are breaking.

Sunny Gosar — MK Ventures — Analyst

Hello?

S.L. Narayanan — Chief Financial Officer

Can you repeat that question, we couldn’t hear you properly?

Sunny Gosar — MK Ventures — Analyst

Yeah. So, my question was on the receivables. So over the last couple of years, we continue to see increase in receivables now — and now, basically the receivable days are almost up to 5.5 months. So do we think that this is the normal level going forward, or is there scope to bring down the receivables to more normalized levels going forward?

S.L. Narayanan — Chief Financial Officer

Yeah, well see, definitely receivables have deteriorated, because of a variety of reasons. But let me assure you, wherever we have issues, we have fully provided for. These are all good receivables. There is absolutely no issue in terms of collections.

Sunny Gosar — MK Ventures — Analyst

Okay. Sure. Thanks. Thanks for the detailed answers.

Operator

Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead.

Siddhartha Bera — Nomura — Analyst

Yeah, hi sir. Thanks for the opportunity. Sir, on this IPL, I mean for this season at least, will it be fair to say that we have booked a large part of the income now and not much is left to be booked in Q3? Or do you think there is still some part, which is — meaningful part, which is left there?

S.L. Narayanan — Chief Financial Officer

We may get some more in Q3, but it’s not a very material number. So we may get a very small number in Q3, because only three matches that happened in this quarter. Unfortunately, both this year and last year, we have not been able to get any ticket sales. Ticket sales was anywhere between INR27 crores to INR28 crores, so that we didn’t earn at all. And also, because of the substitution of Vivo with Dream 11 last year, there was almost a 50% fall in the sponsorship fee that was earned by BCCI, and therefore the distribution to the club owners also got impacted. So we’ve been through some ups and downs in the last two years because of the pandemic. Hopefully next year, which is the last year of the Star contract, which is 2022, we should see a near normalcy, whereby matches are played in India, and we are able to make some money on ticket sales and sponsorship also goes back to the pre-pandemic level. Hopefully that should come through, and of course with the new contract for broadcast rights get settled at the kind of numbers that is being touted in the media, then we will be lapping [Phonetic] all the way to the bank, which is 2023 onwards.

Siddhartha Bera — Nomura — Analyst

Got it, got it. And the last question on this subscription side, again, I mean we have seen now for the revenues, probably stagnating for quite a bit. So if you can just help us understand the growth from here on, you are indicating a double-digit growth. So, I mean, what would be the drivers for that? Only the price increases for the channels, or is there any more on the volume side…

S.L. Narayanan — Chief Financial Officer

No. In fact, we have renewed some of the contracts with some distributors, and those are at some very-very satisfactory kind of increases. Plus we are also anticipating certain digital revenues, which are already in the bag. All that will get booked in Q3 and that’s why we are extremely confident, that our subscription revenues will settle at the projected run rate of a double-digit growth. We are very confident about that.

Siddhartha Bera — Nomura — Analyst

Okay sir, got it. Thanks sir.

Operator

Thank you. The next question is from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead.

Aliasgar Shakir — Motilal Oswal — Analyst

Yeah, thanks for the opportunity. I had couple of questions on your OTT investments and timelines. So last couple of years, we’ve been quite optimistic in terms of the Sun NXT original content outlook. But for some reason, basically it has got kind of postponed because of our investments in movies. Question number one is, I mean, instead of the way that we can probably create a parallel, I mean — team or I mean, a setup, that could kind of intensify investments in Sun NXT. And having — follow up second question over there is that, I understand that movies business in the next couple of quarters will do good, and probably, I mean we could have more releases coming in FY ’23. So if we don’t have a parallel set up, then do you foresee that Sun NXT could probably get derailed further, or kind of postponed further, even beyond FY ’22?

S.L. Narayanan — Chief Financial Officer

No, actually, to be very honest with you, I don’t think there is any OTT platform anywhere, which operates at the kind of margins that we operate. Let me be very, very candid, we have grown this to almost 24.5 million subscribers, with practically zero investment in fresh content and using recycled content. And we’ve also seen that every time we load new movies on to Sun NXT, the original subscribers that are coming on, I mean, not the ones through the OTT deals that we’ve done with other platforms, people who come organically, every time we have a new movie, which is released on Sun NXT, it has been absolutely heartwarming. But I’ve always maintained that, we will certainly make investments. But as luck would have it, I mean nobody foresaw in October 2019 when we said that we will be making some investments, that beginning March of 2020, the whole industry will go through an absolute convulsion. So from March 2020 to two or three months back, it was virtually curtains.

I mean nothing could be done. So we’ve gone through some extraordinary times. So it’s not like, we don’t want to invest or we don’t have the capability or the resources, everything is on board. We are just ready to go. But as I said earlier, because of the investments that are work-in progress, where some significant sums of money have always already been invested. I mean these are not small ticket productions, I mean these are all big ticket productions, involving some blockbuster banners, I mean, whether Director or hero or heroine or music directors. The idea is to take that off the pipeline and release them and start monetizing them, and then we can focus on — because the end of the day, it’s all entertainment. I mean it’s not something that is very different.

So let me be very, very candid here, there is significant investment that will happen in OTT. I can’t tell you — certainly it’s not happening before March of 2022. But you will hear from us, beginning 2020, when we will start investing, and then it will be substantially publicized, when we make that splash, like we do with all our movies.

Aliasgar Shakir — Motilal Oswal — Analyst

Got it. This is very useful and very detailed. Just one quick follow-up, so do you think that will be like a substitute of your big bang movies investment or then you will see parallel investment going?

S.L. Narayanan — Chief Financial Officer

No, it will be somewhere between our serials which are — if we are spending INR100 crores a serial per half hour, it will probably — at the higher level and it will be not several hundred episodes. Probably be about 30 to 40 episodes of half an our each or something. So but it will settle somewhere between a movie and a regular TV soaps. So the investment, we think we will be spending at least INR150 crores to INR200 crores, to start with, on an annual basis.

Aliasgar Shakir — Motilal Oswal — Analyst

Okay. And that will not stop your movie investments?

S.L. Narayanan — Chief Financial Officer

Not at all. Movies will continue with OTT, as well as the regular programing which is fiction and non-fiction. Which as Mr. Mahesh said, will be around INR200 crores to INR250 crores per annum.

Aliasgar Shakir — Motilal Oswal — Analyst

Right. Yeah, I just want to clarify that some, [Speech Overlap].

S.L. Narayanan — Chief Financial Officer

See, the beauty of this — Asgar is, content in any form is actually welcome on an OTT. I mean if you look at an OTT platform today, like Sun NXT, you have live news of Sun News which is available. You have a 24 hour movie channels, whether it’s KTV or Gemini Movies or Udaya Movies. You also have some of our serials on a catch-up basis. Plus you have a movie library, which runs into thousands. So there is a wide range of entertainment, which is available, at very attractive price which you have to pay monthly. So I have no doubt in my mind, this number will only keep going up.

Aliasgar Shakir — Motilal Oswal — Analyst

Got it. And movie investment will be around INR250 crores annually?

S.L. Narayanan — Chief Financial Officer

Maybe more. Maybe more.

Aliasgar Shakir — Motilal Oswal — Analyst

Okay. thank you very much. This is very helpful.

Operator

The next question is from the line of Jiten Doshi from Enam Asset Management. Please go ahead.

Jiten Doshi — Enam Asset Management — Analyst

SL and team, congratulations on a wonderful result. This was quite a surprise compared to when you started the year, you had talked of a number that was far below. There was a lot of apprehensions on the performance and the outlook, and that’s the reason your Board maintained a lot of cash for these bad days. But I think from whatever I have heard on the call, and the presentation, you all seem to be quite optimistic about the outlook of the business. So now, what is the thought process on the dividend payouts on the — any buyback or anything that you want to reward your shareholders with?

S.L. Narayanan — Chief Financial Officer

Jiten, I know this is very dear topic for you. All I can say is, we will continue to maintain the kind of trends that we have maintained in the past, exclude the FY 2021.

Jiten Doshi — Enam Asset Management — Analyst

Okay.

S.L. Narayanan — Chief Financial Officer

I am not sure if we will ever do a buyback, because we believe — the Board believes, that we are better off the regular payments of dividends.

Jiten Doshi — Enam Asset Management — Analyst

Sure.

S.L. Narayanan — Chief Financial Officer

But I can tell you with some confidence, that we will be maintaining this quarterly run rate. It will only keep going up, and I can assure you on behalf of my colleagues, that we will ensure that at least 50% of the disposable profits will get paid out.

Jiten Doshi — Enam Asset Management — Analyst

So if you earn, let’s say INR40 earnings, I am just trying to annualize that this year, then you would be happy to pay out a dividend of INR20 per share. Is that a fair understanding?

S.L. Narayanan — Chief Financial Officer

Fair understanding.

Jiten Doshi — Enam Asset Management — Analyst

Right. And I can take this as a kind of a commitment of value creation to your shareholders?

S.L. Narayanan — Chief Financial Officer

Absolutely.

Jiten Doshi — Enam Asset Management — Analyst

That’s very pleasing to hear. Thank you so much. Thank you, SL. All the very best to you and the entire team. Bye. Sorry, thank you.

Operator

Thank you. The next question is from the line of Nitin Sharma from Moneycontrol Research. Please go ahead.

Nitin Sharma — Moneycontrol Research — Analyst

Yeah, hi. Thanks a lot for letting me in. Two very quick questions, can you please give some color on the international subscription revenue, how we should see it for next one to two years, and then I have a follow-up.

S.L. Narayanan — Chief Financial Officer

Yeah international. As I said, we’ve had a setback with one distributor, and that’s the reason why we didn’t recognize the revenues out of financial conservatism. We believe that international subscription will slowly get taken over by Sun NXT. We are already seeing that. Slowly but steadily, the preferred form of purchase will move from the local cable or the local DTH operator, to Sun NXT, which is also good for us, because we’re disintermediating the trade margin, and getting better yields, by directly serving the customers. It is a classic B2C model.

Nitin Sharma — Moneycontrol Research — Analyst

All right, thanks a lot. Just if I can, I was trying to understand, do you have any plans to have a Sun-as-a-platform on say like Amazon Prime? Because lot of the smaller competitors have moved, like Eros has been there and Discovery has been there? [Indecipherable] Sun?

S.L. Narayanan — Chief Financial Officer

Yeah. See, the thing is I can’t say no or yes, everything depends on the commercials and the context and the situation. If it turns out to be a deal which is worthwhile, why not. But at this point in time, there is no such discussion happening.

Nitin Sharma — Moneycontrol Research — Analyst

Thanks a lot.

Operator

Thank you. The next question is from the line of Sunny Gosar from MK Ventures. Please go ahead.

Sunny Gosar — MK Ventures — Analyst

Yeah, thanks for taking my follow-up. I have just one question with regards to the IPL. So in FY ’21, we had booked almost about INR250 crores of revenue and about INR90 crores of PBT. But if we look at the first half this year, it is about INR176 crores of top line, and about INR58 crores of PBT. And in one of the earlier questions, you mentioned that there is not much revenue which is pending to be booked in Q3. So what is the reason for such a sharp fall in IPL revenue in FY ’22, versus FY ’21?

S.L. Narayanan — Chief Financial Officer

No, I think see primarily it’s the number of matches played between quarters. So the same in September, we had — September quarter we had four matches which were there, and there are only three matches during the October ’21 quarter. Second is also, the point that in 2020 season, our ranking was much higher. Well, this time, we were — our ranking is not as good as what it was. These two will make a difference in the total revenue recognition, between a ’21 season — I mean ’20 season and ’21 season. That’s what [Phonetic].

Sunny Gosar — MK Ventures — Analyst

Okay. But basically, it is almost like 15% lower, is that right?

R. Mahesh Kumar — Managing Director

I think because of issue — see cumulatively, December we will have the numbers out, but the primary influence will be on the positioning in the IPL. I mean out of the teams, this time we were on the eighth position. Last time I think, we were in the fourth or fifth position. So there will be a delta on account of that, a drop in delta on account of that okay.

Sunny Gosar — MK Ventures — Analyst

Okay. Sure.

R. Mahesh Kumar — Managing Director

Thanks.

Operator

Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing remarks.

R. Mahesh Kumar — Managing Director

Thank you all for joining us on the call. Sorry, we had to delayed for the reasons which SL was mentioning, as a season’s greeting [Phonetic] so wish you all a happy new year ahead of time. Thank you very much.

Ankur Periwal — Axis Capital Limited — Analyst

Thank you.

Operator

[Operator Closing Remarks]