Sun TV to benefit greatly from DAS III & IV: Centrum Broking

MUMBAI: Stockbroking firm Centrum Broking’s research team is relatively bullish on the Sun TV Network. In its latest report, Centrum has stated that Sun TV has said that recent developments bode well for the Kalanithi Maran promoted southern TV network.

“We draw comfort from the court’s recent dismissal of all charges against the promoters, its high dividend payout, the Rs 18 billion cash in its books,” its says in the report.

Centrum is hopeful that cable TV digitisation in Phase III and Phase IV will double Sun TV’s subscription revenues over the next three years. “We expect that it would be one of the biggest beneficiaries of the digitization,” the report says.

Evidence of that comes from the recent 30 per cent increase in subscription income YoY and the 10 per cent increase in DTH subscription income (it currently has 13.1 million paying subs) contribution in Q3 FY 2017 .

“It has started to add income from content trading which represents revenue earned from mobile service providers,” says Centrum in the report.

The broker points out that the Sun TV Network management has become cautious on its spends over the past year or so and has stopped handing out big wads of money to acquire expensive movies. This has helped improve its EBIDTA margins as its amortisation expenses have gone down. Centrum expects this trend to continue going forward.

The investment banking firm points out that there is other good news coming in from Sun TV as it relooks at its content strategy for its channels in Telugu and Kannada.

The launch of new shows in the Telugu market has helped it gain significant market share there and increase yield by 30 per cent in Q3 FY 2017. “We believe this yield increase would have a positive impact on the smaller channels in the Telugu market,” it says in the report.

Sun TV is also looking at relaunching its Kannada language channel with commissioned content within the next two months which will gain traction over the next three quarters, Centrum points out.

However, it says that overall Sun TV is struggling (like other media companies) – on the advertising revenues front -- following the impact of demonetization -- as these shrank (in its case 6.8 per cent) in the latest quarter.

“The recovery would take another quarter as Sun TV is highly dependent on local ads and the FMCG sector’s ad spend.”

In the latest Q3-2017 financials declared on 10 February, Sun TV reported a 2.8 per cent increase in YoY revenues to Rs 589.43 crore; PAT growth by 11 per cent to Rs 240.09 crore; and EBIDTA increase by 0.6 per cent to Rs 439.73 crore. The company also declared a 100 per cent dividend for its shareholders.

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