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Booming Digital Lifts Eros Indian Film Distribution Giant

Eros International, India’s largest and most controversial film distributor, says that its digital revenues now outstrip conventional theatrical and syndication revenues. Its Eros Now streaming platform claims 18.8 million paying subscribers.

The New York-listed company reported annual results that were distorted by multiple adjustments to presentation. Reported revenues in the year to end of March 2019 edged ahead by 3% to $270 million.

Operating profits were halved at $27.8 million, but adjusted earnings jumped from $83 million to $104 million. And the company took a huge, non-cash, impairment loss of $423 million. The company said that the write-down reflected a reduction in its market capitalization and a valuation of its film rights. But on a conference call following the release of data, chairman Kishore Lulla said that the charge could be reversed if the market capitalization increases again.

Weighing heavily on the stock price – and hence the market capitalization –have been further accusations by short sellers this year about how the company reports its activities in the Middle East, as well as cuts to its credit rating. The company argues that it beat a previous assault by short sellers in a U.S. court case, and again on appeal. It also says it remains satisfied with its reporting and disclosure procedures, following an internal review, conducted with Wall Street law firm Skadden Arps Slate Meagher & Flom.

“This is also the first year our digital business has generated more than our film and TV syndication businesses, which demonstrates our shift to digital is well underway,” said CFO and North America president Prem Parameswaran.

The company reported digital and ancillary business revenue of $123 million. That compared with theatrical and television syndication revenues of $69.5 million and $77.4 million in revenue, respectively. At the end of March, Eros Now claimed that that paying subscribers had climbed 138%, and that registered users grew had hit 155 million, a 55% increase.

A decrease in theatrical revenues reflected a sharply different mix of releases, with more small and medium titles making a total of 72 film and 11 series released in 2019-19, compared with 24 films in 2017-18. The upcoming slate includes Saif Ali Khan starrer “Kaptan,” the trilingual remake of “Haathi Mere Saathi” and “Kaamiyab” and TV series “Flesh” directed by Siddharth Anand.

Net debt dropped to $145 million from $189 million following equity infusions of $8.2 million from existing owners, and a further $46.4 million from Mukesh Ambani’s Reliance Industries.

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