Strong growth in TV ads drives eMedia revenue to new high

A recovery in television advertising has helped eMedia Holdings to achieve its highest annual revenue numbers. Shares in the broadcast group shot up almost a tenth on Thursday after it more than tripled earnings for the year to end-March.

eMedia, worth R2.38bn, owns television and radio broadcasting businesses that include eNCA, OpenView and Yfm, as well as production studios.

The group said it had “experienced a resounding bounce-back in its financial performance after the impact of the pandemic on businesses and the economy generally”.

eMedia’s revenue for the year of R3.2bn “is the highest ever achieved, underscored by an increase in television advertising revenue”, the company said. At R2.1bn, this revenue stream ended 39% higher than the prior year.

A little traded stock, eMedia shares were up 9.15% on Thursday at R4.65. 

Like other broadcast players, eMedia relies on advertising to keep its operations running. It had seen a huge drop in advertising revenues through the Covid-19 pandemic as businesses cut their sales and marketing budgets to preserve cash. That resulted in the group registering a R2bn impairment in 2020.

The situation has turned around, with the e.tv operator saying it “benefited from the resurgence of television advertising revenues as compared to the pandemic-affected years, which experienced a decline in advertising spend”. Much of this benefit has been attributed to an increase in eMedia prime time audience market share from 29.6% in March 2021 to 34.1% in March this year, an increase of 15.2%.

The group’s satellite television unit, OpenView, became profitable for the first time, accounting for about a fifth of advertising revenue, amounting to R468.1m, up from R269.6m previously. 

Profit from continued operations tripled to R426.4m for the year, up from R138.5m.

The group said it was encouraged by the reception of its recently launched online video streaming service eVOD, in partnership with MTN. 

SA has in recent years seen growth in the number of streaming services that have entered the market, including US players such as Netflix. In the free-to-air market, in which eMedia predominantly plays, partnerships with telecom operators have become the business model of choice.

Competitor SABC recently partnered with Telkom to stream its radio and television content online. The rationale makes sense as operators have large subscriber bases to which they can distribute the broadcaster’s content, while mobile providers can increase data traffic on their networks.

With original programming on eVOD being the biggest pull for new users on the platform, the group plans to invest a further R100m in local content. 

The group declared a final dividend of 25c per share, almost double the prior period’s 14c. 

Outside the earnings growth, eMedia is locked in legal battles with the government over its plan to switch the country over to digital television, while an investigation is under way with competition authorities after MultiChoice chose to pull the plug on four e-channels from DStv. 

gavazam@businesslive.co.za