Indian Stock Market

Q2FY2008 Media earnings preview 

• Media and entertainment companies continued their march ahead. While Q1 marked fund raising activities by majors such as the TV18 group and UTV for their movie ventures and the disclosure of expansion plans in the entertainment business by companies such as Viacom18, Q2 marks the launch of NDTV's lifestyle channel "Good Times" and UTV's proposed launch of youth channel "Bindaas". 
• While the television news channels continue to slug it out in the stiff competition, the general entertainment space awaits the entry of new players. Among the existing channels, Zee TV continues to narrow the gap with the leader Star Plus that should get reflected in the increased ad revenues for Zee Entertainment. 
• This is the third quarter after the implementation of the conditional access system (CAS) in select areas of Mumbai, Delhi and Kolkata. We believe the impact of CAS in terms of enhanced pay revenues from these metros should be reflected in Q2 revenues of the broadcasters. 
• In a major step forward to ensure lower charges to direct to home (DTH) subscribers, the Telecom Regulatory Authority of India (TRAI) has enforced a regulation mandating the broadcasters to offer channels to DTH service providers on an a-la-carte basis. This may spell bad news for the broadcasters as it would curtail their ability to push weaker channels as a part of the bouquet and thereby impact their pay revenues. However, this may lower the overall content cost for DTH service providers, which may help them expand faster.
• We expect a subdued bottom line performance from TV18 as it continues to spend heavily for future growth, while Saregama India's numbers should be impacted by the lack of major releases during the quarter .