Mid-Day Multimedia (MML) is trying to offer an integrated bouquet of advertising services for Mumbai through its increasing presence in publishing, outdoor advertising, radio and interactive IT enabled services. A presence in a wide range of media services helps the company to leverage its content base. On the other hand a package deal can be offered to a prospective advertiser.
Overall Advertising Scenario: The growth in advertising sector in the current year has slowed down compared to last year. Aggregate growth in advertising revenues has only been 7% compared to 17% last year. Therefore, accounting for inflation there has been no real growth in advertising spends in the current year. Last year the print media showed a spurt in advertising revenues fuelled by dotcom ads, which has virtually vanished in the current year.
Improvement in advertising spend is unlikely in the current year. However, the company is trying to compensate for the loss in dotcom business from financial services. Midday is trying to utilize the lean advertising period in capturing more customers by offering an integrated package to its customers.
Print Media Business: In the publishing business, the company currently has three brands viz, Mid-day, Gujarati Mid-day and Sunday Midday. The company is planning to introduce Marathi Mid-day shortly. The circulation of the company has shown a growth of 10% last year, with readership increasing to an all time high of 813,000 Midday readers everyday.
Outdoor Business: In the Outdoor advertising business the company currently has over 1 m sq. foot of outdoor space covering over 35,000 sites and has exclusive rights for advertisements on 2,038 bus shelters, 33,000 electric pole kiosks and certain railway stations for varying periods. However, utilisation rates (34%) are a cause of concern in this business.
Radio Business: MML plans to go aggressive in the radio business. MC Media is a 51:49 joint venture between MML and Capital Radio Plc, UK. In the radio business, MML has bought FM licenses for Mumbai, Delhi and Chennai. The licenses have been under the name of three subsidiaries of MML to minimize risks and to rope in partners for this business, if required. This being a risky venture, the company has decided to limit its exposure to Rs 150 m.
GIS Business: Apart from Chalomumbai.com, Mumbai city centric portal, a GIS project exclusively for Mumbai is in the offing. The idea is to leverage the existing content base of the company.
Newsprint Prices: Newsprint prices are showing a soft trend. The prices have declined from US$ 660 to US$ 450 per tonne currently. The company is expected to benefit from the softening newsprint prices.
Induction of Independent Directors: MML has inducted Mr. Nana Chudasama and Mr. Ravi Raheja as independent directors of the company.
Conclusions: At the current market price of Rs 24, the stock trades at 13x its 1QFY02 annualised earnings. Midday is expected to benefit from softening newsprint prices in the coming quarters. However, the advertising spend is not likely to improve. The RoCE of the company is likely to be impacted further, as the Internet and radio business initiatives are unlikely to pay off immediately. The valuations of the company going forward would depend on the payback period of these new ventures and recovery in advertisement space.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407