Despite alliances, joint ventures and other alliances, matters haven’t improved for India’s media companies. These ‘glamour stocks’ have failed to live up to their investors’ expectations. It remains to be seen how digitisation will affect the industry
The FICCI KPMG 2012 report says that the Indian television sector, which is estimated to be worth Rs329 billion in 2011, is expected to grow at 17% CAGR (compounded annual growth rate) and touch Rs735 billion in 2016. A look at India’s big media companies, however, raises a fundamental question: where is the money?
A few days after the FICCI KPMG report was released, Murdoch’s News Corporation finally sold its stake in Hathway Cable & Datacom. After more than a decade’s wait, the stake was sold for just 5% more than its buying price. Stupefying as the fact is, it is hardly a standalone case. While media reports appear regularly on the great prospects for the media industry in our country, most companies have put up a dismal performance and have decimated investors’ wealth.
News Corp’s Asian Cable Systems had picked up a stake in Hathway for Rs342.72 crore in September 2000 and sold it for Rs358 crore. The return is paltry but Hathway has seen exits by its pre-IPO stakeholders like ChrysCapital—which sold its stake after the 2010 IPO earning 27% returns; and Morgan Stanley Principal Investments, which exited in 2010 too made losses. Hathway has more than Rs275 crore in debt now.
Hathway is not an exception. Den Networks has a debt of Rs156.12 crore on its books and despite a slight improvement of 4% in the December 2011 quarter, the company’s stock price has fallen 37% since its listing in November 2009.
Television channels have seen a steady decline over the years. After the Zee Telefilms (now known as Zee Entertainment Enterprise) split, Zee Entertainment, Zee News and Wire and Wireless, have seen losses. Zee News has seen a 69% decline in its stock price since its debut in January 2007, and Wire and Wireless has a debt of Rs347.63 crore. Wire and Wireless was trading at Rs8.52 on 19 March 2012, having seen a spectacular decline of 93% since its debut five years ago at Rs120.8.
Zee Entertainment, is doing comparatively better—with only a 10% dip in its stock price since its listing in January 2007. Zee’s DTH wing, Dish TV has a debt of Rs1,086.26 crore and since its debut in April 2007 at Rs103.46 the stock has fallen by 48% to Rs53.5 as on 19 March, 2012.
Media companies like NDTV, TV Today and TV18 have also put up less than stellar performances. NDTV has a debt of Rs180 crore and since it got listed in May 2004, its stock has gone down by 59%. TV Today opened at Rs181.35 on BSE in January 2004. On 19 March 2012 it was trading at Rs54.90, the stock having gone down by 70%. The TV18 stock has managed to lose more in a shorter period, having plunged 72% since its debut at Rs100.33 on the BSE in February 2007. The cash-strapped company has Rs292.78 crore of debt on its books.
Network18 Media & Investments performed even less spectacularly. It debuted on the BSE in February 2007 at Rs366.75. On 19 March 2012, the stock was trading at a meagre Rs36.50, which is 90% lower than its listing price. In the last one year, as of 19 March 2011, the company’sstock price has fallen by 75%. TV18 follows closely, with a slide of 72% during the same period; and NDTV with a 40% decline in its stock price.
According to the ministry of information and broadcasting, there are 812 television channels in India, as of 29 December, 2011. Despite alliances, joint ventures and other alliances, matters haven’t improved for India’s media companies. These ‘glamour stocks’ have failed to live up to their investors’ expectations. Yet, the hype surrounding the ‘Indian media boom’ continues unabated.
Now, it remains to be seen how digitisation will affect the industry—which everyone is looking forward to.
(Courtesy: Moneylife Digital Team & Money Life, personal finance magazine by Sucheta Dalal)