MEDIA :Q4FY12 RESULTS PREVIEW :Kotak Securities PDF link

Please Share::  India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

http://www.kotaksecurities.com/pdf/dmb/MorningInsight10042012.pdf

MEDIA
Advertising expenditures have seen modest growth in the quarter, as per
our discussions with media companies. We expect the industry advertising
revenues to have grown 6-7% in the quarter. Outperformers would include
Jagran Prakashan, HT Media which would benefit from assembly elections
and greater monetization/ improved readership, respectively. Hindi
Entertainment channels, held by Zee Entertainment and TV18 Broadcast, are
likely to have underperformed the industry (emergence of a new player
among top channels). Sun TV financials are likely to feel continued strain on
account of distribution disturbance in the Tamil Nadu market. Expect weak
growth from radio advertising as well, which will impact ENIL.
Costs shall continue to remain on predicted lines. Newspaper publishers'
gross margins shall continue to be under strain on account of high
newsprint prices. Broadcasters' costs are likely to have risen in the quarter,
on account of greater pressure to programming hours/ higher quality of
programming. We expect EBITDA margins of our coverage universe to
decline 5 ppt y/y.
 DB Corp: We expect DB Corp to have grown modestly ahead of the industry, on
account of strong regional drivers of the company and a high dependence on
local advertising, which tends to be more resilient. We forecast revenue growth
of 11%(y/y) for the company. Given favorable base effect of higher newsprint
prices, we expect margin compression to be minor (60bps). EPS is expected to
grow 10%.
 ENIL: On account of an adverse base effect (benefits from cricket season last
year), we expect ENIL to register significant declines in advertising revenues for
the company. This, along with expectations of higher marketing spends in the
quarter (relative to 3QFY12), lead us to expect a sharp decline in the company's
EBITDA margin in the fourth quarter (15 ppt contraction q/q, and y/y). We expect
PAT for the company to decline 52% (y/y) in 4QFY12. We note, however, that
write-backs in private treaties' provisions and lower marketing spends (possible,
with lower competitive intensity) pose significant positive risks to our estimates.
 HT Media: English newspapers' growth shall be kept in check on account of
weakness in advertising in metro cities, while Hindustan shall continue to grow in
double digits. We expect 10% growth in advertising revenues. HT Media shall
continue to face pressure on the gross margin on account of rupee depreciation,
which results in 4.9 ppt decline in EBITDA margin in 4Q (y/y). We expect PAT to
decline 7% y/y.
 Jagran Prakashan: We expect Jagran Prakashan to report advertising revenues
slightly ahead of peers on the back of assembly elections in several states. However, we gather that polictical advertising has been softer than expected on account of restrictions and subsequent monitoring of advertising by the Election
Commission. Expect revenue growth of 13%, minor margin erosion (0.7 ppt),
and 4% growth in PAT for the company.
 Sun TV Network: We expect Sun TV Network shall continue to see weak subscription revenues, on account of distribution issues concerning Arasu Cable. We
estimate total revenues to decline 6.4% y/y. We expect margins to continue on
a downward path, registering 12.3 ppt decline y/y (for comparison purposes, we
look at EBIT margins of Sun TV, and the table above shows the same). Net profit
is expected to be lower 22% y/y.
 Zee Entertainment: Zee Entertainment is likely to see y/y decline in revenues
on continued pressure on advertising revenues of the company. Programming expenses are expected to be higher this quarter, on account of sports as well as
general entertainment, leading to significant shrinkage in EBITDA margins. We
expect PAT Rs 1488mn, down 24% y/y