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Media IPO’s : Caveat Emptor - Views on News from Equitymaster
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  • May 23, 2000

    Media IPO’s : Caveat Emptor

    History it’s said repeats itself first as a tragedy, then as a farce. We’ve seen this time and again in the primary market. A whole horde of companies, from a single industry tap the primary market. This is mainly a function of capital availability rather than any concrete business plans that the companies have. Two years later, shareholder expectations go bust.

    In the mid–eighties it was the leasing companies that tapped into the primary market. In the early nineties it was the finance companies. Then came the turn of software companies. And now it’s the turn of the media companies.

    Company Business IPO Plans
    (Rs bn)
    Sun TV Broadcaster 8.0
    Udaya TV Broadcaster 5.0
    Gemini TV Broadcaster 5.0
    Broadcast Worldwide Broadcaster 1.0
    NDTV Content provider 4.0
    Creative Eye Content provider 1.2
    Sagar Entertainment Content provider 0.5
    Nimbus Entertainment Channel 2.0
    UTV Channel+Content 2.0
    Padmalaya Telefilms Content provider 0.3
    Sony Broadcaster 25.0
    Modi Entertainment Distributor 1.0
    Indus Ind Media Cable operator 3.5
    Tips Industries Music 0.15
    Mukta Arts Content provider 0.03
    Tabassum International Content provider 0.06
    Eenadu TV Broadcaster NA
    Pritish Nandy Comm. Content provider NA
    Star TV Broadcaster NA
    Magnasound Music NA
    Total   58.7

    The plans seem to be getting bigger and so do the numbers. Contrary to the expectations that a bad market would lead to the postponement of their IPOs, media companies seem to be in no mood to roll back their ambitious plans of tapping the market.

    Company Current Price 52 week High
    Zee Telefilms 431 1630
    TV-18 547.25 2351
    Sri Adhikari Brothers 394.6 2350
    Gramaphone Company 486.2 2316
    Cinevista 245.15 427
    Crest Communications 303 410

    At the latest reports, media companies are planning to tap around Rs 60 bn from the market. This is despite the fact that the stock prices of the media companies that are already listed have seen a free fall in their prices. Most of the companies that are entering the market are mere content providers who could easily have gone the venture capital route.

    As in the past, it is the investors who would face another tragedy.



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