The dazzle of entertainment IPOs - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

The dazzle of entertainment IPOs

Jun 26, 2000

With the primary market boom well and truly on, media IPOs, which had earlier been deferred are back with a bang. Almost Rs 60 bn is to be wrapped up by various media companies planning their IPOs.

CompanyBusinessIPO Plans (Rs bn)Reputation of the
Management
Track
record
Likely
fancy
Sun TVBroadcaster8.0Visionary MgtGoodVery High
Udaya TVBroadcaster5.0Taken over by the Sun TV groupGoodHigh
Gemini TVBroadcaster5.0Taken over by the Sun TV groupGoodHigh
Broadcast WorldwideBroadcaster1.0Dynamic, Rathikant Basu headed DD and Star earlier New ventureFair
NDTVContent provider4.0Decent managementGoodVery High
Creative EyeContent provider0.8Decent managementGoodHigh
MagnasoundMusicNAUnknown managementUnknownFair
Sagar EntertainmentContent provider0.5Unknown managementGoodFair
Nimbus EntertainmentChannel2.0Consolidated group cos accounts last year OKFair
UTVChannel+Content2.0Visionary Mgt; diversified revenue streamGoodVery High
SonyBroadcaster25.0Dynamic ManagementVery goodVery High
Modi EntertainmentDistributor1.0Reputation coloured by group's past performanceUnknownLow
Indus Ind MediaCable operator3.5Reputation coloured by group's past performanceUnknownLow
Tips IndustriesMusic0.2Reputation coloured by group's past performanceUnknownLow
Mukta Arts Content provider1.0Good, but lumpy revenue streamGoodFair
Eenadu TVBroadcasterNARamoji Rao is a well known media baron in the SouthGoodHigh
Pritish Nandy Comm.Content providerNAUnknown managementUnknownLow
Tabassum InternationalContent provider0.1Unknown managementUnknownLow
Star TVBroadcasterNARupert Murdoch's Indian AffliateWiped out lossesVery High
Total IPO size59.0   
NOTE: This is not based on meetings with companies

Most of them are mere content companies who are having a good time as a result of a surfeit of channels looking out for content. However, it must be kept in mind that over the longer run it is the broadcaster and pay channels, which make the most money, not the content provider.

This is because the entry barriers for a new content provider to enter the field are quite low and hence over a period of time the margins get eroded. For the broadcaster, the initial entry barriers themselves are quite high.

First, off course is the cost of the leasing the transponder (which carries one or at best two channels) which works out to Rs 10 m pa. And mind you, this is a recurring expenditure. Second, is the cost of the setting up the uplinking facility, which allows the broadcaster connect to the satellite. Third, is the cost of setting up pre-production (scripting, casting, planning etc) and post-production facilities (dubbing, editing titling, effects).

Thus overall start up investments of anywhere around US $ 55-60 m (Rs 25 bn) are required over three years for setting up a broadcasting facility. And if one intends to become a platform owner the size of the investments could easily double. Hence it makes sense to stick to IPOs of the broadcasters such as Sun TV, Sony and Star TV who have already put their broadcast networks in place. Even internationally, there are six studios Disney, Time Warner, News Corp, Bertelsmann, Universal and Viacom which dominate the media sector.

In case of content providers one should watch out for accounting policies especially those pertaining to the write off of production costs and telecast fees apart from the fact whether the content provider continues to hold the copy rights of his content even after the first telecast.

Even in the past we've seen ICE stocks melt quickly. The current IPO boom promises to be no different.

Equitymaster requests your view! Post a comment on "The dazzle of entertainment IPOs". Click here!

  

More Views on News

What Fuelled the Sudden Surge in PVR and Inox Shares Today (Views On News)

Sep 27, 2021

Shares of both multiplex chain operators surged almost 18% to hit their 52-week highs.

8 Penny Stocks with Exceptionally High Promoter Holding (Views On News)

Sep 25, 2021

While high promoter holding is a good thing, there can be rare cases where penny stock promoters use misleading information about the actual valuation.

Shareholder Activism Triggers a 30% Rally in Zee Entertainment Shares (Views On News)

Sep 14, 2021

Zee Entertainment shares zoom after top investors seek CEO and MD Punit Goenka's removal.

Here's Why Affle India Hit 5% Upper Circuit Today (Views On News)

Jul 2, 2021

In the past one year, the company's share price is up 202%. Can it go higher?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE TECK


Nov 26, 2021 (Close)

COMPARE COMPANY

MARKET STATS