a year, yaar !!!!! Indian media stocks soared
like there was no tomorrow before the (in hindsight
inevitable) turnaround and since then it's just been
down, down, down...
came true for some while the harsh reality of shattered
hopes was what most had to swallow.
few became billionaires, many virtually (on paper)
turned millionaires overnight. But for the average
Joe it's time to pick yourself off the floor. The
bar is closed and has been for some time. If anything
marked out the rollercoaster that was the Year 2000
it must surely be the madness that was the Dotcom
mantra. The year gave birth to the concept of New
Economy stocks also known as TMT stocks or ICE stocks.
The concept of a unified world market gained ground
as the ripple effect of market forces in one country
affected stocks in other markets. A clear sign of
what the future holds. As the world comes to terms
with Pax Americana, for stock indices it was the Nasdaq
which showed the way for investors as the global indicator
for technology stocks.
year started with a big bang for new economy stocks
which for a time literally flattened those from the
old economy. It reached its zenith in the month of
February. And then the bubble started losing air and
its been haemorrhaging ever since.
Sensex, the effective indicator of the stock market,
reached its alltime high at 6,150 intraday on 14 Feb
2000. Then it started its inexhorable southwards travel
which has hardly been disturbed throughout the year.
The Sensex was hovering around the 4,000 mark at the
end of the year.
stocks simply rode on the wave of market frenzy. Mutual
funds and instititutional investors chased media stocks
like dogs in heat to supposedly balance their portfolios.
The scarcity of media stocks in the Indian market
in the initial period of the year coupled with the
fatal attraction of TMT stocks pushed even second
rank media stocks in the upward spiral. The insanity
in the Market was best exemplified in the listing
of TV18 stocks at 10 times its issuing price. It was
the same story with all other media stocks too. This
resulted in giving more importance to valuations based
on some assumption rather that actual revenue generation
and profit making.
back, our average Joe didn't stand a chance. With
the convergence hype created by the multi-billion
dollar Time-AOL merger. Fuelled by the phenomenal
post-listing returns by TV-18, stocks in the media
sector touched dizzying heights.
as it positioned itself as a major convergence player
in India, was caught up in the market frenzy. Its
share (which was split by 1:10 at Rs 670 in December
1999) zoomed up to touch Rs 1,630. But then it plunged
downwards as the market headed in the same direction.
All its grandiose plans, be it the buying of Asianet
or the Agrani satellite project or the internet over
cable project, all essentially dependent on its share
valuation, were thrown into troubled waters. Almost
in tandem with the failure of its growth plan was
the onslaught by Star on Zee's advertising revenue.
The main bread and butter source for the group as
of now, it all took a heavy toll of the Chairman Subhash
Chandra's script. The huge success of Star's 'Kaun
Banega Crorepati' followed by the miserable showing
of Zee's 'Sawal Das Crore Ka' resulted in a further
downslide. The scrip is currently trading at a 52
week low of Rs 250 with a market capitalisation of
around Rs110 billion. Even though the company has
agreed to undertake a restructuring plan it has many
a mile to go to regain its lost glory.
major loser of the year was Chennai-based Pentamedia
Graphics which has seen its scrip skid to the tune
of 73%. The scrip was at Rs 1,500 in January 2000
and went up to Rs 2,250 in March. It's been all downhill
since then. To add to its worries it recently lost
a Nasdaq listed client who contributed a sizeable
portion to its revenue. It has also acquired 51% stake
in the loss making Film Roman, a Nasdaq listed company
which failed to generate expected business. The scrip
is currently trading at Rs 285 and there is no sign
of recovery in the near future. Additionally, it has
been chasing a dud project, NumTV.com, which has hype-hype
written all over it and looks unlikely to make money
for several years to come.
Communications, which is basically an ad film maker
and also into animation/graphics as well as being
a TV software production house performed relatively
better. Financial Year 2000 saw net profit climbing
up from Rs4.4 million in 1999 to Rs23.5 million. But
the quarter ended in September 2000 showed a loss
of Rs9.3 million. The scrip was traded at Rs550 in
January, which went up to touch a 52 week high of
Rs1,357 in mid-March. Then it came down with the market
and settled at Rs350 in September. The scrip hovered
around that level for almost two months before taking
a nosedive again. At year-end, the scrip was trading
company's advertising division commands a market share
of over 20 per cent. In computer graphics, its clients
include Warner Brothers, Disney, Rich Animation and
and Universal. Looking at its rich clientele, strong
team and hold over the market, the company is expected
to do well in 2001. Even exports will drive earnings
for the company.
Kapoor clan of Balaji Telefilms: Sizzling the
Adhikari Brothers was another media scrip which made
its mark in the year 2000. It is a content rich company
with more than 2,000 hours worth of software in its
possession, which is slated to go up to 4,000 hours
in the next few months. The company had launched its
channel in March this year which is doing fairly well.
The share touched a high of Rs 2,350 during the mayhem,
and then came down drastically to Rs 200 towards yearend.
The trading volumes are very low showing low liquidity.
though broadcasting involves a higher risk as it takes
time for a channel to break even and become a cash
generator, the company has a low gearing and can raise
funds without really putting much pressure on its
balance sheet. If the channel could generate good
cash the scrip will be lifted, otherwise software
production, which is the core competency of the group
will keep the scrip floating.
TV18 is another strong media scrip which has held
its own in the latter part of the year. As there are
many channels, it is the programming which makes the
difference and ultimately affects revenue generation.
TV18 has a strong content background. And even though
its share price could not hold the initial swelling
post its listing, it can still claim to be in a good
position. The scrip traded at Rs 1,950 immediately
after getting listed in January and then scaled a
record high of Rs 2,323 in mid-March. In the post
frenzy era it drastically came down and was trading
around Rs 305 by the end of the year. But in the last
quarter it has shown a firmness which looks likely
to continue in first few months of 2001.
Telefilms created some waves at the end of the year
due to rumours floating of a tie-up with a US company.
The stock is now comparatively stable, and being in
TV software production has growth potential. It is
one of the stocks where investors are zeroing in.
small stocks like ATN international, Jain Studios,
Galaxy Multimedia have maintained a low profile except
for some shocks due to the initial turmoil in the
stocks (which are also considered as new economy stocks)
which were once being clubbed along with information
technology stocks will no longer be able to hide under
investors have recognised that they are a different
breed, despite their convergence plays and close association
with the Internet, and information technology. The
recognition is even more apparent with the response
to the four content providing TV companies which made
their IPOs towards the latter half of the year and
are doing reasonably well on the bourses.
a depressed market, Balaji Telefilms, Pritish Nandy
Communications, Mukta Arts, Tips Music, notched up
good shows,indicating the market's honeymoon with
the media has not ended. Balaji Telefilms proved a
great performer. It reached Rs260 which is double
its issuing price of Rs130 within the first month
of trading. The merger with Nine Entertainment Network
proved to be blessing as it is giving assured revenue.
Other new scrips like Pritish Nandy Communications,
Mukta arts are also doing well and are expected to
perform well in the new year due to a strong brand
name and experience.
TV penetration still low, there is tremendous potential
for broadcasters. Good news for the broadcasters would
be the approval for DTH, digital terrestrial transmission
and DTO as well as uplinking permission. Similarly,
with more and more broadcasters coming up, demand
for content providers is expected to rise sharply.
However, looking forward, the going for television
software companies should be better as they are becoming
a favourite of the market. The reason is simple. Broadcasters
rely on advertising revenues for their income. They
generate their revenues if the shows they air become
popular and generate high TRPs. And who is it that
provides them these shows? TV software providers of
course and their downside is much less than broadcasters
as they are commissioned to produce a certain number
of episodes and income is guaranteed. They have hardly
any gestation period for revenue generation if they
get the creative part right. Additionally, with an
increasing number of channels launching the need for
content is skyrocketing. And KBC (Kaun Banega Crorepati)
has proved how even an also-ran network can be turned
around and make pots of money with quality programming.
New Year will probably see more players entering the
field to tap the primary market. Names range from
big players like UTV, NDTV, Sony Entertainment Television
to relatively smaller ones like Nimbus. Even Bollywood
icons now want to share the pie. Clearly, the sector
more on the Year 2000 from
developments in television
cable TV front
broadcasting legislation perspective