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UBS Investment Research
India Media Sector
Q3FY11 preview: seasonally strong quarter
„ Broadcasters likely to report strong growth in ad and subscription revenue
We expect broadcasters to report strong ad revenue growth in Q3 primarily due to
increased A&P spends by corporates during the festive season. Sun TV is also
likely to report significant revenue growth (+44% YoY) due to the strong success
of the movie ‘Endhiran’, released in Q3. We expect IBN18 (restructured) to
achieve net profit breakeven on proforma basis in Q3.
„ TV distribution sector: expect Dish TV to report strong Q3 results
We estimate Dish TV to report strong revenue growth (+16% QoQ) led by strong
subscriber adds (~1.1m gross). We expect Dish TV’s ARPU to grow 4.5% QoQ
from Rs139 in Q2 to Rs145 as Dish TV raised prices of silver and gold packages
by Rs10-15 per month in September 2010. We expect Hathway’s consolidated
revenues to grow 10% QoQ to Rs2.5bn. Hathway added ~72k digital cable subs in
October-November 2010 (versus Dish TV’s gross adds at ~850k during the same
period).
„ Positive view on Zee Entertainment, IBN18, Dish TV and Hathway
We reiterate our Buy ratings on Zee Entertainment, IBN18, Dish TV, and Hathway
Cable with DCF-based price targets of Rs180, Rs130, Rs77, and Rs275,
respectively. We maintain our Sell rating on Sun TV with a DCF-based price target
of Rs500.
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