Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted PINC Media & Entertainment Conference on 28th Feb, 2012. Players from across the platforms of media
participated in the event. Sony Entertainment, Industry Experts, Media planners and unlisted players helped us
understand better about the Industry scenario and the competitive landscape of the respective segment. The
conference clearly elucidated short term apprehensions and integral long term growth story.
Given below are the key highlights of the conference.
Broadcasting: Not a great year but an exception for few
The year started on a positive note, however slowdown in the economy and high inflationary environment resulted in ad
budgets being hampered and hence only necessary advertising was done especially for second rung channels and regional
players like Sun TV. However, lead channels like Sony Entertainment and Star Plus performed well. TV advertisement
registered growth of 9% in 2011. In 2012 Television is expected to maintain a marginal growth rate of 10%.
Print: Regional outperformed English
The Print advertising segment grew at 8% in 2011. The growth rate was down mainly in English press advertising (regional
print revenue in double digits, however English Print grew at low single digit rate) which led to slow growth in the entire print
segment. Advertisers, specifically from BFSI and telecom spent cautiously on print in the second half of the year. No big
IPOs and no big launches impacted the advertising revenues. The entire focus was on regional consolidation with existing
players launching new editions into existing and new markets. Print media advertising is expected to reflect a growth of 6%
in 2012.
Radio: Bleak performance
Radio advertisements grew marginally by 2% in 2011 owing to lack of innovation in the medium. The only happening factor
was Phase III policy announcement by the government. Radio advertisement growth rate in 2012 is expected to be better at
5% mainly because of Phase III.
Outdoor: Blank period
Outdoor advertising revenue fell 10% in 2011 with its share in the total ad pie falling from 6.1% in 2010 to 5.1%. Spends on
outdoor have decreased in the major metros but some respite is seen on the back of rising spends in Tier II and Tier III cities.
2012 is expected to see some revival with a modest growth of 5%.
Cinema: Blockbuster year
The segment performed exceptionally well on account of blockbuster releases like – Ready, Bodyguard, Dabaang, Don 2,
RaOne, Rockstar etc. The Ad revenue grew 18% in 2011 pocketing Rs1.4bn revenues. Cinema advertising is expected to
increase its contribution in 2012 to 0.6% of the total ad pie from the current 0.4%.
Our View:
We reiterate that regional players will be better placed during the current economic slowdown. Despite slowdown in national
advertising, local spending (Automobile, FMCG, Clothing) will provide support to the regional players. Rising newsprint cost
for print players and surging content cost for broadcasting players remain a concern. With mandatory digitisation we expect
MSOs and broadcasters to gain immensely on account of increase in the declared subscriber base and higher subscription
revenue.
Balaji Telefilms
The company is not into acquisition model for movies because of the cost and risk
associated. They work on a co-production model where the creative risk is shared but
the financial risk remains with Balaji.
The company has 4-6 movies lined up for 2012.
Their content business continues to make losses due to large volumes.
The business has high operating leverage depending on volumes.
DB Corp
Highest ad growth market for the company is MP followed by Rajasthan.
Chhattisgarh is expected to see 17 new power projects leading to increase in advertising
through Print.
The company will launch its 5th Marathi edition in Sholapur in March, 2012. Bihar
edition launch slated for FY13.
DB Corp earns Rs5-6 mn per month from Ujjain edition.
The company is present mainly in markets where the per capita income is above the
national average.
With Phase-III, the company may add 25-30 radio stations with a spend of ~Rs400-
500mn.
Den Networks
The company has started Ad campaigns on TV and Print to make viewers aware of the
digitisation mandate and market its digital STBs.
The company has started offering its STBs at Rs799.
To enable smooth implementation of migrating their analog subscribers to digital in
phase I, the company has placed an order for 2mn STBs with Skyworth and Huawei for
which it needs a capex of ~Rs3bn.
The company will venture into offering broadband services post the digital roll-out.
Eros
Dependence on theatrical business is reducing even though it commands 30% CAGR
growth
They have adapted to the Studio model followed by Disney and Warner
They enter into exclusive licensing contracts for selling satellite rights to broadcasters
and most of the rights are sold even before the release of the movie.
The company follows a portfolio approach wherein they do a huge bouquet of films
across genres, ~70-75 movies helping them de-risk their portfolio.
They expect to do more than 75 movies a year in the coming years of which 15%
would be bollywood and rest regional. They target to do 8-10 high budget movies
yielding high margins, with 2 being self production.
Hathway Cable
The company expects to roll out 1.2mn boxes in FY13. It currently has an inventory of
0.64mn boxes.
For Phase I and II, the company will incur a capex of ~Rs6bn.
Post some debt raising, its current Debt:Equity of 0.3 may rise to 0.5 by June, 2012.
Hathway has no plans for raising equity in the near term, however if an interesting
acquisition of a cable operator comes up, they may consider.
The company has a contract with Intelenet to set up call centres in Mumbai for its
broadband services, which if works out well, it will extend for its cable services as well.
INCableNet (Hinduja Ventures)
The JVs contribute 10% of the subscription revenues for the company, balance is
contributed through direct points.
The company expects to digitise ~2.5mn customers in Phase I, of which 0.5mn are
already digitised.
60% of their revenue is contributed by carriage fee which may reduce to 20-30% post
digitisation.
In a digitized scenario, the basic tier price would be Rs150 including only FTA channels.
Revenue received for FTA channels through direct points will solely be owned by the
company and not paid to the broadcaster. Will receive 20% of FTA revenues from JVs.
The company expects an ARPU of ~Rs200 in Mumbai and Delhi in Phase I.
INCableNet plans to reach 0.2mn broadband subscribers by 2014 from the current
40,000 broadband homes.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We hosted PINC Media & Entertainment Conference on 28th Feb, 2012. Players from across the platforms of media
participated in the event. Sony Entertainment, Industry Experts, Media planners and unlisted players helped us
understand better about the Industry scenario and the competitive landscape of the respective segment. The
conference clearly elucidated short term apprehensions and integral long term growth story.
Given below are the key highlights of the conference.
Broadcasting: Not a great year but an exception for few
The year started on a positive note, however slowdown in the economy and high inflationary environment resulted in ad
budgets being hampered and hence only necessary advertising was done especially for second rung channels and regional
players like Sun TV. However, lead channels like Sony Entertainment and Star Plus performed well. TV advertisement
registered growth of 9% in 2011. In 2012 Television is expected to maintain a marginal growth rate of 10%.
Print: Regional outperformed English
The Print advertising segment grew at 8% in 2011. The growth rate was down mainly in English press advertising (regional
print revenue in double digits, however English Print grew at low single digit rate) which led to slow growth in the entire print
segment. Advertisers, specifically from BFSI and telecom spent cautiously on print in the second half of the year. No big
IPOs and no big launches impacted the advertising revenues. The entire focus was on regional consolidation with existing
players launching new editions into existing and new markets. Print media advertising is expected to reflect a growth of 6%
in 2012.
Radio: Bleak performance
Radio advertisements grew marginally by 2% in 2011 owing to lack of innovation in the medium. The only happening factor
was Phase III policy announcement by the government. Radio advertisement growth rate in 2012 is expected to be better at
5% mainly because of Phase III.
Outdoor: Blank period
Outdoor advertising revenue fell 10% in 2011 with its share in the total ad pie falling from 6.1% in 2010 to 5.1%. Spends on
outdoor have decreased in the major metros but some respite is seen on the back of rising spends in Tier II and Tier III cities.
2012 is expected to see some revival with a modest growth of 5%.
Cinema: Blockbuster year
The segment performed exceptionally well on account of blockbuster releases like – Ready, Bodyguard, Dabaang, Don 2,
RaOne, Rockstar etc. The Ad revenue grew 18% in 2011 pocketing Rs1.4bn revenues. Cinema advertising is expected to
increase its contribution in 2012 to 0.6% of the total ad pie from the current 0.4%.
Our View:
We reiterate that regional players will be better placed during the current economic slowdown. Despite slowdown in national
advertising, local spending (Automobile, FMCG, Clothing) will provide support to the regional players. Rising newsprint cost
for print players and surging content cost for broadcasting players remain a concern. With mandatory digitisation we expect
MSOs and broadcasters to gain immensely on account of increase in the declared subscriber base and higher subscription
revenue.
Balaji Telefilms
The company is not into acquisition model for movies because of the cost and risk
associated. They work on a co-production model where the creative risk is shared but
the financial risk remains with Balaji.
The company has 4-6 movies lined up for 2012.
Their content business continues to make losses due to large volumes.
The business has high operating leverage depending on volumes.
DB Corp
Highest ad growth market for the company is MP followed by Rajasthan.
Chhattisgarh is expected to see 17 new power projects leading to increase in advertising
through Print.
The company will launch its 5th Marathi edition in Sholapur in March, 2012. Bihar
edition launch slated for FY13.
DB Corp earns Rs5-6 mn per month from Ujjain edition.
The company is present mainly in markets where the per capita income is above the
national average.
With Phase-III, the company may add 25-30 radio stations with a spend of ~Rs400-
500mn.
Den Networks
The company has started Ad campaigns on TV and Print to make viewers aware of the
digitisation mandate and market its digital STBs.
The company has started offering its STBs at Rs799.
To enable smooth implementation of migrating their analog subscribers to digital in
phase I, the company has placed an order for 2mn STBs with Skyworth and Huawei for
which it needs a capex of ~Rs3bn.
The company will venture into offering broadband services post the digital roll-out.
Eros
Dependence on theatrical business is reducing even though it commands 30% CAGR
growth
They have adapted to the Studio model followed by Disney and Warner
They enter into exclusive licensing contracts for selling satellite rights to broadcasters
and most of the rights are sold even before the release of the movie.
The company follows a portfolio approach wherein they do a huge bouquet of films
across genres, ~70-75 movies helping them de-risk their portfolio.
They expect to do more than 75 movies a year in the coming years of which 15%
would be bollywood and rest regional. They target to do 8-10 high budget movies
yielding high margins, with 2 being self production.
Hathway Cable
The company expects to roll out 1.2mn boxes in FY13. It currently has an inventory of
0.64mn boxes.
For Phase I and II, the company will incur a capex of ~Rs6bn.
Post some debt raising, its current Debt:Equity of 0.3 may rise to 0.5 by June, 2012.
Hathway has no plans for raising equity in the near term, however if an interesting
acquisition of a cable operator comes up, they may consider.
The company has a contract with Intelenet to set up call centres in Mumbai for its
broadband services, which if works out well, it will extend for its cable services as well.
INCableNet (Hinduja Ventures)
The JVs contribute 10% of the subscription revenues for the company, balance is
contributed through direct points.
The company expects to digitise ~2.5mn customers in Phase I, of which 0.5mn are
already digitised.
60% of their revenue is contributed by carriage fee which may reduce to 20-30% post
digitisation.
In a digitized scenario, the basic tier price would be Rs150 including only FTA channels.
Revenue received for FTA channels through direct points will solely be owned by the
company and not paid to the broadcaster. Will receive 20% of FTA revenues from JVs.
The company expects an ARPU of ~Rs200 in Mumbai and Delhi in Phase I.
INCableNet plans to reach 0.2mn broadband subscribers by 2014 from the current
40,000 broadband homes.
No comments:
Post a Comment