In Hindi movies genre (urban + rural), Sony Max surged ahead of Rishtey Cineplex to take the lead, whereas Zee Cinema didn’t feature in top 5 in two out of four weeks in April.
Based on viewership data from BARC website, Zee TV further strengthened its #1 position in pay Hindi GEC category in April 2018; the channel had a ‘relative’ viewership share of 24.5% (up 118 bps m-o-m), while market share of Colors slipped marginally to 21.4% from 22.2% in March. In the free-to-air (FTA) domain in rural markets, Zee Anmol maintained its pole position among Hindi GECs — total viewership volume was 30% ahead of #2 channel (Sony Pal). In Hindi movies genre (urban + rural), Sony Max surged ahead of Rishtey Cineplex to take the lead, whereas Zee Cinema didn’t feature in top 5 in two out of four weeks in April.
Zee’s performance in regional space was mixed — Bengali ‘relative’ viewership share was down 56bps m-o-m in Apr-18, whereas Zee Marathi gained 202bps ‘relative’ market share to end up at c.57% in Apr-18. Market share in Kannada GEC space witnessed a modest decline (-135bps), even as Zee Kannada maintained its #2 position behind the leader Colors Kannada. Zee Telugu gained 284bps viewership share to become the #2 GEC behind MAA TV. Zee Tamil saw a marginal gain of 83bps in viewership share. Net-net, steady viewership of Zee channels augurs well for its ad revenue growth, in the context of ongoing ad-spend recovery led by FMCG sector.
Sun TV Network — viewership weakness in key markets continues
Flagship Tamil GEC, Sun TV, continued to see erosion in viewership share (44% in Apr vs. 45% in Mar). Telugu GEC (Gemini TV) gained 82bps share but remained at #4 with c.22%; the gap between Gemini and market leader [MAA TV] expanded to 5 pps. Nonetheless, both Kannada (Udaya TV) and Malayalam [Surya TV] GECs witnessed uptick in viewership share, by 114 bps and 70bps m-o-m, respectively.
Key news flow in last four weeks
(i) The promoters of Dish TV made an open offer to shareholders for acquiring additional 26% stake in the company for a total consideration of Rs 37.01 bn in cash; (ii) Dish TV admitted 277.1 mn GDRs (Global Depository Receipts) to trading on London Stock Exchange. Videocon d2h delisted American Depository Shares from Nasdaq; (iii) DEN Networks announced plan to expand its fixed broadband services to 100 cities in CY18 and 500+ cities in the next 2-3 years; (iv) TRAI reiterated its recommendations to the I&B ministry that DTH licences be issued for 20 years, and subsequently renewed for 10 years.
GTPL is top media pick
Zee shares were up only 2.2% in April, while Sensex rose 6.7%. Both Zee and Sun are reporting Q4 results this week. We expect a muted Ebitda growth for Zee in Q4FY18 (18.4% decline on q-o-q basis), driven by costs incurred in re-launch of OTT platform (Zee5). Sun shares were up 3.7% in April. Our forecasts for Sun may be optimistic, given risks to revenue growth rates —intensifying Tamil/Telugu competition, digitisation-delays and/or lower monetisation. We find Sun’s valuations unattractive at 24x forward or FY19e P/E and >15x forward EV/Ebitda; these multiples are at a 25% premium to historical averages. Our blue sky Mar’19e fair value for Sun is Rs 1,050 per share, based on: (i) 15% ad CAGR for FY18E-22e; (ii) promoter compensation fixed at Rs 500 mn p.a. versus 10% of PBT currently.