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Zee Entertainment
Zee TV back at #3
Event
Media agency TAM has released viewership data for the week ending
November 6. Zee TV and Sony have tied for the third spot. We remain
positive on Zee and think competition has plateaued.
Impact
Zee TV is back at #3 with 176 GRPs. According to the data released by
TAM, Star Plus remained the #1 channel with 336 GRPs, followed by Colors
at #2 with 258 GRPs. Zee TV and Sony both gathered 176 GRPs for the
week. Imagine continues to remain at the #5 slot, as the recently launched
show Baba Aiso Var has not shown traction (see Figs 1 and 2 for detailed
weekly GRP trends).
Impact of KBC wearing off. Sony had displaced Zee TV from the #3 slot
following the launch of Season 4 of the internationally successful game show
Who Wants to be a Millionaire on 11 October 2010. Even so, four weeks after
the launch of the show, the GRP (viewership) ratings of the channel have
started slipping.
Performance of fiction shows crucial for loyal eyeballs. Fiction soaps
adjoining celebrity-hosted shows need to get sampled and build a loyal
viewership base for a general entertainment channel (GEC) to have sustained
GRP momentum. This is a key metric that we would be monitoring for Sony.
Past experience with Colors and Imagine clearly indicates that successful
celebrity shows do not necessarily translate into steady viewership trends.
Competition remains intense, but how much would it hurt? We remain
mindful of the competitive intensity in the broadcasting space. Even so, our
15% advertising revenue growth forecast for the company in FY12 adequately
captures the fragmentation of the ad revenue pie.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs335.00 based on a DCF methodology.
Catalyst: Uptick in advertising rates.
Action and recommendation
Retain OP. We expect Zee to deliver a FY11–13E earnings CAGR of 18%.
The stock has done well in the recent trading session, up 7% in the last two
weeks. Weakness in the stock price due to competition overhang could
provide an attractive entry point.
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