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Creative Eye: Another channel, another IPO - Views on News from Equitymaster
 
 
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  • Mar 6, 2000

    Creative Eye: Another channel, another IPO

    Creative Eye is launching a 24-hour tele-shopping channel, expanding studio facilities and launching general entertainment and internet portals. It is planning to fund this through an Initial Public Offering (IPO) expected to be priced at around Rs 300.

    Creative Eye is mainly in the business of producing programmes for the national broadcaster Doordarshan (DD). It currently has 21 hours of programming per week on air to various DD channels. These include big time hits such as ‘Om Namah Shivay’ which draw over Rs 1 crore of broadcasting per week. The company is also in the business of acquiring and marketing of films to DD.

    The boom in the media stocks and the valuations that the media stocks are commanding has focused the attention of the media companies including Television 18, Zee TV Sri Adhikari and Cinevista on the capital market as a source of funding for their expansion plans (either through an IPO or through private placement).

    Creative Eye through seems to have done its groundwork before making its plans public. With uplinking rights likely to be made available to local companies content providers are looking at becoming broadcaster’s themselves. However, initially the company plans a tele-shopping channel.

    The plans for the tele-shopping channel are interesting since this would be the first of its kind in India. The business model is also likely to be different from the normal channels. Obviously the company would be charging the manufacturers of the product for the advertisers.

    However a major part of the IPO funding is likely to be given to expansion of studio facilities since the company would anyway need to have the content in place for the channel.

    However, the companies plans at becoming an internet portal are likely to be a lot more capital extensive. A portal requires far higher marketing and advertisement expenditure to make the portal visible than the amount required for setting it up. The estimates for this range at around Rs 500 m. One is not sure as to the percentage of funds out of the company’s IPO plans of Rs 1.2 bn that will be set for funding the portal.

     

     

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