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UBS Investment Research
India Media Sector
Hindi GEC’s ad volumes decline in March
Event: TAM released advertising volume data for March 2011
TAM has released advertising volume data for Hindi entertainment channels (HGEC)
for the month of March 2011. Colors’ advertising volumes declined 19.4%
MoM, while Star Plus and Zee TV’s advertising volumes dropped 0.5% and 1.6%,
respectively. Star Plus’ implied card rate fell 8.7% MoM, while it declined by
around 2% for both Colors and Zee TV.
UBS view: expect Q4 advertising revenue to come under pressure
As highlighted in our note ‘World Cup impact on India media sector’ dated 16
March 2011, we estimated a potential marginal shift in advertising volumes or
pressure on advertising yields in March 2011 if team India reached the ICC World
Cup finals. However, the decline in advertising volumes for Colors (operated by
IBN18) has been significantly higher than expected. We think this decline could be
event driven (due to the ICC World Cup) and not a structural issue with Colors
(which was #1 Hindi entertainment channel last week). We estimate advertising
revenues would come under pressure for Zee Entertainment and IBN18 in Q4
FY11 due to the outstanding performance of the Indian cricket team at the ICC
World Cup.
Valuation: maintain Buy on Zee Entertainment and IBN18
We see any potential weakness in IBN18’s stock price (due to the March 2011
advertising volume decline) as a buying opportunity as it is a long-term play on
growing subscription revenues. We would not be overly concerned on the
advertising volume decline as it is accompanied by higher viewership, which bodes
well for the company in the longer term. We maintain Buy ratings on Zee and
IBN18 with DCF-based price targets of Rs165 and Rs130, respectively
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Media Sector
Hindi GEC’s ad volumes decline in March
Event: TAM released advertising volume data for March 2011
TAM has released advertising volume data for Hindi entertainment channels (HGEC)
for the month of March 2011. Colors’ advertising volumes declined 19.4%
MoM, while Star Plus and Zee TV’s advertising volumes dropped 0.5% and 1.6%,
respectively. Star Plus’ implied card rate fell 8.7% MoM, while it declined by
around 2% for both Colors and Zee TV.
UBS view: expect Q4 advertising revenue to come under pressure
As highlighted in our note ‘World Cup impact on India media sector’ dated 16
March 2011, we estimated a potential marginal shift in advertising volumes or
pressure on advertising yields in March 2011 if team India reached the ICC World
Cup finals. However, the decline in advertising volumes for Colors (operated by
IBN18) has been significantly higher than expected. We think this decline could be
event driven (due to the ICC World Cup) and not a structural issue with Colors
(which was #1 Hindi entertainment channel last week). We estimate advertising
revenues would come under pressure for Zee Entertainment and IBN18 in Q4
FY11 due to the outstanding performance of the Indian cricket team at the ICC
World Cup.
Valuation: maintain Buy on Zee Entertainment and IBN18
We see any potential weakness in IBN18’s stock price (due to the March 2011
advertising volume decline) as a buying opportunity as it is a long-term play on
growing subscription revenues. We would not be overly concerned on the
advertising volume decline as it is accompanied by higher viewership, which bodes
well for the company in the longer term. We maintain Buy ratings on Zee and
IBN18 with DCF-based price targets of Rs165 and Rs130, respectively
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