Dead Companies Walking - Entertainment Network (India) Ltd
Entertainment Network India Limited (ENIL) has been on a concerning trajectory of negative profit growth over the past few years. In FY2016, ENIL posted a net profit of ₹109 crores. However, this figure dwindled to ₹11 crores FY2020 and in FY2022, it dropped to a net loss of ₹36 crore. The company’s margin for the corresponding period has decreased from 31% to 16%. To gain a deeper insight into this trend, let’s delve further into the company’s operations.
ENIL operates across three key segments:
-
Radio Broadcasting: ENIL stands as the proprietor of the Radio Mirchi brand, the largest private FM radio network in India. Operating across 63 stations in 14 states, it boasts a broad reach of over 63 million listeners.
-
Out-of-Home Media: Under the Times Square brand, ENIL manages a network of digital billboards and street furniture in major Indian cities.
-
Experiential Marketing: ENIL extends a suite of experiential marketing services, including event management, content creation, and social media marketing.
The company primarily derives revenue from advertisement through radio broadcast activities. However, this core revenue stream faces two major headwinds. The business demands significant capital and operational expenditures, consequently eroding profit margins. The audience shift towards ad-free, on-demand, and personalized music experiences on mobile apps has posed a substantial challenge. This trend, prevalent in developed countries, is steadily gaining traction in India, with consumers favoring free apps like Spotify or its premium version for paid services.
The digital billboard sector’s growth prospects are dimming as companies and political entities opt for online marketing strategies, which offer targeted segment engagement at more economical rates. Additionally, the experiential marketing sector faces fierce competition from new-age AI tools capable of generating content rapidly and at reduced costs.
The company’s financial results over the past five years stand as a testament to the pressures brought on by the aforementioned challenges. Without a pivot towards a lower capital expenditure model and a strategic shift towards the digital realm, ENIL’s ability to generate shareholder wealth and attract both new-age customers and investors remains questionable. The company’s survival and growth may hinge on its agility in adapting to the evolving digital landscape and seizing opportunities that align with changing consumer preferences and market dynamics.