TV Today to raise Rs 1.5 billion from IPO in Dec

NEW DELHI: The Aroon Purie-controlled TV Today Network Ltd., which manages the affairs of Hindi news channel Aaj Tak and its English sibling, Headlines Today, is looking at raising approximately Rs 1500 million from the market through its initial public offer (IPO).

According to capital market sources, the TV Today Network scrip is likely to make its debut on the stock markets during the third week of December, which is to say, between 15 to 22 December.

A final decision on the date would be taken after obtaining the green signal from the Foreign Investment Promotion Board (FIPB), slated to discuss the change in the TVTN shareholding pattern issue on 5 December, and the Indian market regulator, Securities Exchange Board of India (SEBI).

Besides the promoters, post-IPO, the other investors' holdings too would undergo a change, which have to be communicated to the FIPB and then to the Registrar of Companies.

GE Capital, which holds 7.5 per cent equity stake in TVTN at present, would see its holding go down to 6.2 per cent after the IPO. Similarly, ICICI's shareholding would go down to 8.3 per cent from 10 per cent, Ankit International's to 0.7 per cent from 1.7 per cent and Bharti Systel's to 4.14 per cent from 10 per cent.

In the run-up to the IPO in the past, TVTN has said that it would use the money raised from the capital market for expansion purposes as also in launching some niche TV channels.

The public issue is of 14,500,000 equity shares comprising fresh issue of 10,000,000 equity shares of Rs 5 each at a price that has not yet been decided yet for cash and offer for sale of 4, 500,000 equity shares of Rs 5 each at a price yet to be announced.

The issue would constitute 25 per cent of the fully diluted post issue paid-up capital of the company and is being made through 100 per cent book building process wherein up to 50 per cent of the issue shall be allocated to institutional buyers on a discretionary basis, 25 per cent would be allocated to non-institutional investors and 25 per cent would be allocated to retail investors.

The book running lead manager to the issue is JM Morgan Stanley Pvt. Ltd.

As part of its business strategy, TVTN in its draft prospectus has said that it is well positioned to expand in the fast growing news broadcasting industry that is well positioned to achieve further growth as a result of increasing penetration, viewer preference to continuously stay informed and the growing number of advertisers in the news broadcasting genre.

The objective to further consolidate the leadership position in the news broadcasting genre would be done through the following business strategies, according to the draft prospectus:

* Increase viewership by upgrading our studios and bureaus, investing in state-of-the-art technology and software, creatively innovate to differentiate ourselves from competition to increase viewer loyalty, launching niche channels and distributing our news channels to Indians abroad;

* Capture an increasing share of advertising revenue potential by introducing innovations and incentives in our annual rate card, focus on offering sponsorships of our programs, offering differentiated programming mix at the weekends and expanding time bands and increasing inventory utilization;

* Significantly increase the inventory utilization on Headlines Today;

* Charge subscription revenue, when appropriate; and

* Managing growth while optimizing cost.

TVTN has also stated in the draft prospectus that the advertisement revenues increased by 112 per cent to Rs 1081.83 million in the financial year 2003 from Rs 510.23 million in the financial year 2002. This increase in revenue was primarily due to increase in advance orders of Rs 122.6 million in the first quarter of the financial year 2002 to Rs 905.1, amongst other factors.

Other revenues increased significantly to Rs 8.92 million in the financial year 2003 from Rs 0.39 million in the financial year 2002. This was primarily on account of increase in interest on deposits, due to surplus cash available with us during the financial year 2003 in comparing to financial year 2002.

However, the production cost in financial year 2003 also increased by approximately 20 per cent to Rs 97.38 million in financial year 2003 from Rs 80.94 million in the financial year 2002. Production cost as a percentage of total revenue decreased to approximately 8.9 per cent in the financial year 2003 from approximately 15.7 per cent in the financial year 2002. The increase in production cost was primarily due to increase in uplinking charges and other production expenses.

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