Shemaroo Entertainment - Yesterday Once More: King Of Reruns; Visit Note :: Edelweiss

Please Share::

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

��

-->

We recently met Mr. Hiren Gada, Director-Finance, and Mr. Jai Maroo, Director-New Media, of Shemaroo Entertainment (Shemaroo). Founded in 1962, the company is one of the largest content aggregators in India. Unlike Eros, which is mainly present in the first cycle of a movie launch, Shemaroo does not have much presence in theatrical (both domestic and overseas) and TV revenue chain (only the first cycle). The company participates in the less risky (hence low return) second and subsequent cycles of movie monetisation due to higher visibility of a movie’s performance. Strong relationships with producers and broadcasters are key positives. However, elimination of content aggregators like Shemaroo via direct deals between producers and broadcasters and high acquisition costs in future are key risks.

Unique business model helps mitigate risk of high cost new movies

Shemaroo acquires either perpetual or aggregated (limited) movie rights after expiry of the first satellite TV rights contract and distributes these old movies across media platforms. ~60% of movie rights are sold directly by producers to TV broadcasters and other platforms like You Tube etc. Using proprietary tools to evaluate content, Shemaroo taps the balance 40% movies. As on July 31, 2014, it had in its kitty 2,918 titles with 759 perpetual rights and 2,159 aggregated rights.

Shemaroo makes it easier for broadcasters to acquire movies

Shemaroo aims to derive an IRR of 18% for its portfolio. Broadcasters like STAR, ZEE, Sony and UTV are serious players when it comes to acquisition of movies. For these broadcasters, it is convenient to deal only with Shemaroo and not directly with ~70-80 producers. In the organised content aggregation space, Shemaroo does not have any competition. In addition, its new media business (~10% of revenue) is bound to benefit as increased broadband penetration will spur video consumption.

LINK
https://www.edelweiss.in/research/Shemaroo-Entertainment--Yesterday-Once-More-King-Of-Reruns;-Visit-Note/27804.html