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IBN18 BROADCAST
Starting to benefit from potential of Colors
Revenue up 22% Y-o-Y, ahead of our estimate
IBN18 Broadcast’s (IBN) Q3FY11 revenues rose 22% Y-o-Y to INR 2,360 mn
(ahead of our estimate of INR 2,166 mn); revenues jumped 25% Q-o-Q. Colors
has retained its strong No.2 position in the GEC space on the back of reality
show Big Boss 4, premiere of Dabangg and fiction shows. MTV and Nick have
maintained their leadership in youth and kids genres, respectively.
Consequently, Viacom18 posted 21% revenue growth Y-o-Y. CNN IBN continued
to dominate the general news space, with 30% market share. Also, there has
been strong ratings growth at IBN7. Y-o-Y, revenue growth for general news and
IBN Lokmat stood at 24% and 16%, respectively. Q3FY11 revenues for GEC and
general news were boosted by festive season related ad spends. Subscription
revenues, from SUN18 entering into long-term contracts with DTH companies
and cable operators, could provide upside in FY12.
EBITDA margin expand 3x Y-o-Y
The company recorded EBITDA of INR 321 mn (against our estimate of INR 60
mn), an impressive improvement from INR 80 mn in Q3FY10 and INR 20 mn in
Q2FY11. EBITDA margin in Q3FY11 stood at 13.6% against 4.1% in Q3FY10.
Viacom18 reported operating profit of INR 510 mn (against INR 90 mn in
Q3FY10) on the back of strong ad revenue growth. General news operating profit
increased to INR 80 mn from INR 55 mn in Q3FY10 and a loss of INR 70 mn in
Q2FY11, as revenues grew 39% Q-o-Q.
IBN18 records PAT level profitability
In Q3FY11, IBN18 reported PAT of INR 198 mn against loss of INR 106 mn in
Q3FY10 and a loss of INR 129 mn in Q2FY11.
Outlook and valuations: Improving; maintain ‘BUY’
NewTV18 has one of the strongest bouquets of channels across genres with
leading channels such as Colors, CNBC TV18, CNBC Awaaz, CNN IBN, MTV, Nick,
and IBN7. It has consistently been able to maintain its viewership share and will
gain due to uptick in the ad environment. NewTV18 is focused on building
subscription revenues and provides the best scale-up due to a low base and
strategic alliance with Sun TV. We maintain ‘BUY’ on IBN18 (NewTV18) and rate
it ‘Sector Performer’ on relative return basis.
Q3FY11 conference call takeaways
• Q3FY11 was seasonally the strongest quarter for GEC and general news. Business
news will see uptick in Q4.
• Sun 18: Negotiations on with Cable and DTH for annual deals. The deals should be in
place by March.
• Subscription: 10-11% total revenues currently, should grow by 2.5-3x over next
three years and will be 25-30% of total revenues. Later, subscription revenues will
grow with the market.
• IBN18 has started receiving subscription revenue from DTH in the US. Cable
subscription revenues in the US expected over next few months.
• Restructuring expected to be completed in next 3-4 months.
• Hindi movie channel will be launched in the next few months. Regional channels will
be launched later in the year or next year.
• Viacom 18 content cost is expected to increase due to increase in programming, but
ad revenue is also expected to increase. Carriage costs are expected to come down
over next two years.
Company Description
NewTV18 is a leading broadcaster in India. It owns and operates, some of the strongest
properties across genres such as CNBC TV18 and CNBC Awaaz (business news genre),
CNN IBN (English news genre), Colors (Hindi GEC genre), MTV (youth and music genre),
Nickelodeon (kids genre) and VH1 (international entertainment genre). NewTV18 and
A&E Television Networks (AETN) have formed a joint venture, AETN-18 India, to launch
History, Bio and other popular AETN channels in the Indian market.
Investment Theme
The advertising spend by companies is increasing with revival in the overall business
environment. We continue to believe that the overall fundamental dynamics
(demographics, income levels, consumption of media) remain strong for the media
industry. We also have a positive outlook on growth in subscription revenues, on the
back of implementation of cable digitization and higher penetration of DTH. NewTV18
has one of the strongest bouquet of channels across genres with leading channels such
as Colors, CNBC TV18, CNBC Awaaz, CNN IBN, MTV, Nick, IBN7. It has consistently been
able to maintain its viewership share and will gain due to a sharp uptick in ad
environment. NewTV18 is focusing on building the subscription revenues and provides
the best scale up due to a low base and strategic alliance with Sun TV.
Key Risks
• Slowdown in the economy, limiting growth in advertising spending
• Increased competition from ET Now and Bloomberg UTV may lead to a loss of
viewership and rise in overall expenses
• Enhanced competition in the Hindi GEC space
• Slower-than-expected off take in subscription revenues
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
IBN18 BROADCAST
Starting to benefit from potential of Colors
Revenue up 22% Y-o-Y, ahead of our estimate
IBN18 Broadcast’s (IBN) Q3FY11 revenues rose 22% Y-o-Y to INR 2,360 mn
(ahead of our estimate of INR 2,166 mn); revenues jumped 25% Q-o-Q. Colors
has retained its strong No.2 position in the GEC space on the back of reality
show Big Boss 4, premiere of Dabangg and fiction shows. MTV and Nick have
maintained their leadership in youth and kids genres, respectively.
Consequently, Viacom18 posted 21% revenue growth Y-o-Y. CNN IBN continued
to dominate the general news space, with 30% market share. Also, there has
been strong ratings growth at IBN7. Y-o-Y, revenue growth for general news and
IBN Lokmat stood at 24% and 16%, respectively. Q3FY11 revenues for GEC and
general news were boosted by festive season related ad spends. Subscription
revenues, from SUN18 entering into long-term contracts with DTH companies
and cable operators, could provide upside in FY12.
EBITDA margin expand 3x Y-o-Y
The company recorded EBITDA of INR 321 mn (against our estimate of INR 60
mn), an impressive improvement from INR 80 mn in Q3FY10 and INR 20 mn in
Q2FY11. EBITDA margin in Q3FY11 stood at 13.6% against 4.1% in Q3FY10.
Viacom18 reported operating profit of INR 510 mn (against INR 90 mn in
Q3FY10) on the back of strong ad revenue growth. General news operating profit
increased to INR 80 mn from INR 55 mn in Q3FY10 and a loss of INR 70 mn in
Q2FY11, as revenues grew 39% Q-o-Q.
IBN18 records PAT level profitability
In Q3FY11, IBN18 reported PAT of INR 198 mn against loss of INR 106 mn in
Q3FY10 and a loss of INR 129 mn in Q2FY11.
Outlook and valuations: Improving; maintain ‘BUY’
NewTV18 has one of the strongest bouquets of channels across genres with
leading channels such as Colors, CNBC TV18, CNBC Awaaz, CNN IBN, MTV, Nick,
and IBN7. It has consistently been able to maintain its viewership share and will
gain due to uptick in the ad environment. NewTV18 is focused on building
subscription revenues and provides the best scale-up due to a low base and
strategic alliance with Sun TV. We maintain ‘BUY’ on IBN18 (NewTV18) and rate
it ‘Sector Performer’ on relative return basis.
Q3FY11 conference call takeaways
• Q3FY11 was seasonally the strongest quarter for GEC and general news. Business
news will see uptick in Q4.
• Sun 18: Negotiations on with Cable and DTH for annual deals. The deals should be in
place by March.
• Subscription: 10-11% total revenues currently, should grow by 2.5-3x over next
three years and will be 25-30% of total revenues. Later, subscription revenues will
grow with the market.
• IBN18 has started receiving subscription revenue from DTH in the US. Cable
subscription revenues in the US expected over next few months.
• Restructuring expected to be completed in next 3-4 months.
• Hindi movie channel will be launched in the next few months. Regional channels will
be launched later in the year or next year.
• Viacom 18 content cost is expected to increase due to increase in programming, but
ad revenue is also expected to increase. Carriage costs are expected to come down
over next two years.
Company Description
NewTV18 is a leading broadcaster in India. It owns and operates, some of the strongest
properties across genres such as CNBC TV18 and CNBC Awaaz (business news genre),
CNN IBN (English news genre), Colors (Hindi GEC genre), MTV (youth and music genre),
Nickelodeon (kids genre) and VH1 (international entertainment genre). NewTV18 and
A&E Television Networks (AETN) have formed a joint venture, AETN-18 India, to launch
History, Bio and other popular AETN channels in the Indian market.
Investment Theme
The advertising spend by companies is increasing with revival in the overall business
environment. We continue to believe that the overall fundamental dynamics
(demographics, income levels, consumption of media) remain strong for the media
industry. We also have a positive outlook on growth in subscription revenues, on the
back of implementation of cable digitization and higher penetration of DTH. NewTV18
has one of the strongest bouquet of channels across genres with leading channels such
as Colors, CNBC TV18, CNBC Awaaz, CNN IBN, MTV, Nick, IBN7. It has consistently been
able to maintain its viewership share and will gain due to a sharp uptick in ad
environment. NewTV18 is focusing on building the subscription revenues and provides
the best scale up due to a low base and strategic alliance with Sun TV.
Key Risks
• Slowdown in the economy, limiting growth in advertising spending
• Increased competition from ET Now and Bloomberg UTV may lead to a loss of
viewership and rise in overall expenses
• Enhanced competition in the Hindi GEC space
• Slower-than-expected off take in subscription revenues
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