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Zee Entertainment
Twist in the plot, Zee TV at #4
Event
Zee TV, the flagship channel of Zee Entertainment continues to be #4 in the
Hindi GEC genre for the fifth straight week as per the latest viewership data
released by TAM. (See Figure 1-2)
Rise of Sony TV (Not listed) to #2 slot on back of the game show and new
family soap could add to the concerns on slowing advertising growth. We
retain our counter consensus cautious view and our FY13 EPS is 7% below
street estimate.
Impact
Sony continues stay at No 2. The latest TAM data for week ended 10th
September has established Sony as the No. 2 player in the Hindi GEC space
for the fourth week running and ahead of Zee TV for five straight weeks.
Given the viewership momentum with the new format of the game show KBC
we believe the viewership data for Zee would continue to disappoint for next
couple of weeks. The pressure in viewership could accentuate the advertising
growth from 4Q FY12 for Zee. (See Figure 1-2)
New programming from competition to hurt viewership ratings. The
onslaught of new and existing programming in coming months from
competition like Big Boss - Season 5 (Colors), KBC Season 5 (Sony TV),
Masterchef India Season 2 (Star TV), Kutch to Log Kahegein (Sony TV), and
Survivor India (Star TV) will likely continue to put pressure on Zee’s TAM
ratings.
Sports rights drag on cash flows. Zee has renewed sports rights for South
Africa and Zimbabwe for a period of eight years for a consideration of
US$180m and US$20m, respectively. Renewal of cricket rights at higher
valuations could continue to strain free cash flows. After registering a Rs2bn
loss in the segment in FY11, the company has guided to cap its Sports losses
to Rs800m-1bn in FY12.
Buyback helps in supporting share price. Latest data shows the company
has bought back 11.3m shares through 13 September 2011. The company
has put aside Rs7bn for buybacks at a maximum price of Rs126.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs130.00 based on a DCF methodology.
Catalyst: Sustained weakness in channel ratings of flagship channel Zee TV
Action and recommendation
Recommend investors to sit out the earnings downgrade cycle.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee Entertainment
Twist in the plot, Zee TV at #4
Event
Zee TV, the flagship channel of Zee Entertainment continues to be #4 in the
Hindi GEC genre for the fifth straight week as per the latest viewership data
released by TAM. (See Figure 1-2)
Rise of Sony TV (Not listed) to #2 slot on back of the game show and new
family soap could add to the concerns on slowing advertising growth. We
retain our counter consensus cautious view and our FY13 EPS is 7% below
street estimate.
Impact
Sony continues stay at No 2. The latest TAM data for week ended 10th
September has established Sony as the No. 2 player in the Hindi GEC space
for the fourth week running and ahead of Zee TV for five straight weeks.
Given the viewership momentum with the new format of the game show KBC
we believe the viewership data for Zee would continue to disappoint for next
couple of weeks. The pressure in viewership could accentuate the advertising
growth from 4Q FY12 for Zee. (See Figure 1-2)
New programming from competition to hurt viewership ratings. The
onslaught of new and existing programming in coming months from
competition like Big Boss - Season 5 (Colors), KBC Season 5 (Sony TV),
Masterchef India Season 2 (Star TV), Kutch to Log Kahegein (Sony TV), and
Survivor India (Star TV) will likely continue to put pressure on Zee’s TAM
ratings.
Sports rights drag on cash flows. Zee has renewed sports rights for South
Africa and Zimbabwe for a period of eight years for a consideration of
US$180m and US$20m, respectively. Renewal of cricket rights at higher
valuations could continue to strain free cash flows. After registering a Rs2bn
loss in the segment in FY11, the company has guided to cap its Sports losses
to Rs800m-1bn in FY12.
Buyback helps in supporting share price. Latest data shows the company
has bought back 11.3m shares through 13 September 2011. The company
has put aside Rs7bn for buybacks at a maximum price of Rs126.
Earnings and target price revision
No change.
Price catalyst
12-month price target: Rs130.00 based on a DCF methodology.
Catalyst: Sustained weakness in channel ratings of flagship channel Zee TV
Action and recommendation
Recommend investors to sit out the earnings downgrade cycle.
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