Entertainment - India;Changing Fortunes

SEVANTI NINAN


What impact does the global financial crisis have on the media boom in India, partly backed by foreign direct and institutional investors?

The interesting thing is that TV news has shown itself to be an ephemeral commodity, compared to the old media.


Bad news is good for the media business. And if you keep hammering away about the financial crisis and the market meltdown, nobody will notice the story you are sitting on — the Great Indian Media Meltdown.

Last week, if you had a Rs. 1000 crores to spare and if they were available for sale, you could have bought both NDTV and TV Today, down as they were to market caps of Rs. 638 and Rs. 353 crore respectively. That would have got you at least seven news channels. (But you would not have been able to pick up a single listed newspaper company for that price.) For the first time after becoming listed became the way to go for ambitious media companies, the chickens are coming home to roost. Stocks prices are down, company results are dismal. Advertising, on which these companies are heavily dependent for revenues, can be expected to decline.

From the beginning of this decade, media companies began to be listed so that they could get upbeat valuations, offload stock and finance expansion. The Hindustan Times and Deccan Chronicle were classic examples of this, as were NDTV and CNBC TV 18. Before that, in the 1990s, Zee TV’s parent company had shown the way. Fuelling the optimism about the gold mine awaiting them in the market was the media growth story, that has now held firm for half a decade at least, and that seemed to peak in May-June last year when everybody was writing frenzied stories about media stocks being the flavour of the month.

Dim outlook

Last year this column called it a media boom riding more on hype than revenues. Everybody was expanding, nobody was making money because there were too many newspapers and too many TV channels around for advertising to spread itself across. Foreign direct investment was flowing into media, as were investments from foreign institutional investors who thought media as a sector was an excellent buy, and this was helping to finance an endless stream of new entrants. But today those institutional investors are going bust so what does the picture look like for market-led media?

Not rosy, shall we say. Stock values of prime companies have plummeted. Take half a dozen and compare their 52 week high to their current prices. TV 18 has gone from Rs. 599.79 to Rs. 92, NDTV from 512 to 101, TV Today from 199 to 60.85, Zee News from Rs. 92 to 31.95, HT Media, which publishes The Hindustan Times and Hindustan, from 266 to 82, Jagaran Prakashan, which publishes Dainik Jagran, from 169 to 58, Deccan Chronicle from 270 to 53.8. As for Sun Network, the currently highest valued media company, its current price is 173 compared to its 52 week high of 442, and that of Zee Enterprises 148 compared to a high of 349. (All prices for Wednesday morning when this column was being written.)

Last week, the results of some of these companies for the second quarter were coming in, and were not cheering. NDTV booked losses, HT Media’s profits were down by 49 per cent. Though its revenues were higher than for the same period last year, NDTV’s bottom line showed a net loss of Rs. 119 crore, given its entertainment business expansion. This month its board approved a demerger of its news and entertainment businesses.

Hardest hit

The interesting thing in all this is that TV news, which gets all the attention and attracts investors, has shown itself to be an ephemeral commodity, compared to the old media. Newspaper companies, when the chips are down, maintain steadily higher valuations. Last week the market capitalisation of print companies looked like this compared to TV companies: HT Media’s market cap was Rs. 1933 crore, Deccan Chronicle’s stood at Rs. 1318 crore, Jagran Prakashan at Rs. 1748 crore. And the TV biggies? TV 18 was less than all of these at Rs. 1109 crore, and NDTV, as one has already mentioned, had a market cap of Rs. 638 crore. IBN18 Broadcast (which owns CNN IBN) had a market cap higher than its big brother TV 18, at Rs. 1123 crore. Zee News had a market cap of Rs. 766 crore.

TV entertainment companies currently have more steady value. So Sun Network had a market cap of Rs. 6833 crore, Zee Enterprises of Rs. 6196 crore and a software company like UTV Software at a market valuation of Rs. 3354 crore and at a current stock price of Rs. 612 (down from a 52 week high of Rs. 1132 ) was doing quite handsomely, in the circumstances. The much hyped Balaji Telefilms was down to Rs. 94 a share, from a 52 week high of Rs. 388. Its market cap was all of Rs. 615 crore.

How will the slowdown manifest itself? Newspapers are cutting pages, TV companies planning print media entries are holding off, for the present. TV 18’s business newspaper venture with Financial Times as well as its Hindi business newspaper venture with the Jagran group are currently on hold.

Tailpiece: ISRO may have triumphed as a space organisation, but it won’t win any prizes for its media capabilities. On Wednesday morning, its cameras could not catch the actual take off, with clouds being blamed. And surely it doesn’t take rocket science to give us the names of the scientists who took to the mike after the launch?