TV Today: Disappointing slot - Views on News from Equitymaster

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

  • MyStocks


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

TV Today: Disappointing slot

Nov 17, 2004

Performance summary
TV Today, an India Today Group company and the leader in the Hindi news segment in the country, continued its disappointing financial performance in the September 2004 quarter. Not only did the company register a negative topline growth during the quarter, a sharp increase in operating expenses dented the company’s operating performance severely, pushing it’s bottomline into the red.

(Rs m)2QFY042QFY05Change1HFY041HFY05Change
Net Sales 278 268 -3.6% 560 613 9.5%
Expenditure 158 270 71.5% 307 502 63.5%
Operating Profit (EBDITA) 120 (3)  253 110 -56.3%
EBITDA margin (%)43.2%-1.0% 45.1%18.0% 
Other income 1 25   3 46  
Interest 0 0 0.0% 11 1 -94.7%
Depreciation 26 40 50.2% 49 76 54.8%
Profit before tax94 (18) 19579-59.5%
Tax 34 (7)  70 29 -58.8%
Profit after Tax/(Loss) 61 (11)  126 50 -59.9%
Net profit margin (%)21.8%-4.2% 22.5%8.2% 
No. of Shares (m) 48.0 58.0   48.0 58.0  
Diluted earnings per share*5.0-0.8 5.21.7 
Price to earnings ratio (x)    51.8 
(* annualised)      

Hindi news genre leader
TV Today, the owner of the two news channels, 'Aaj Tak' (Hindi) and ‘Headlines Today’ (English), is a leading business news broadcaster of India. Its Hindi news channel, 'Aaj Tak' (launched over 4 years back) continues to remain the most popular news channel in the country and there is little doubt in the company's claim that it has changed the way news is delivered to Indian audiences. While 'Aaj Tak' delivers news in Hindi, reaching out to the large Hindi belt constituting approximately 52% of India's urban population as per NRS 2002, the English news channel, 'Headlines Today', is primarily targeted at the young urban audience.

What has driven performance in 2QFY05?
Net sales:  The topline of the company registered a 4% YoY fall during the quarter and on a QoQ basis, the fall has been sharper at 22%, the latter being a factor of the reduced contribution from the election mania. While the company has a large and a diversified base of advertisers on its channels and has long-term contracts with many of these, the fall in topline has come as a surprise to us. Seemingly, the lack of contribution from its English channel ‘Aaj Tak’ towards topline and profitability continues to remain a drag on the company’s overall performance. It must be noted here that the company continues to derive its revenues primarily from advertisement, as it has not gone ‘pay’ for its two channels yet.

On the subscriptions front, while the company had expressed its intentions of becoming a pay channel once CAS is in place, as yet there seems to be no progress on either front – pay and CAS. Also, the company had expressed intentions of going international to markets like the US and the UK, in an effort in order to tap the huge Indian population that has a presence in these countries. However, as yet, there has been no further announcement by the company in this regard.

Operating profits:  The total expenditure during the quarter witnessed a sharp rise of 72% YoY during the quarter despite a falling topline, pushing the company into losses at the operating level itself. The margins crashed from over 43% in 2QFY04 to –1% in 2QFY05. If we consider the details of the operating expenses, while the employee costs have surged by over 90% YoY, the transmission and production costs have also doubled. As per the company presentation, the rise in the latter can be attributed to the increased expenditure on non-recurring events like state elections, Olympics and recurring expenses like cricket. Other expenses have also more than doubled. Additional coverage and manpower led to an increase in the company’s expenses on traveling and communication. As far as the advertisement and promotional expenses are concerned (156% growth YoY), a dedicated media campaign aimed at promoting its English channel ‘Headlines Today’, led to higher expenses under this head.

Further, it must be noted that significant competition has cropped up in the news segment with the entry of news channels like Sahara Samay and NDTV India. Even DD News has undergone a revamp and is now a stronger contender in the Hindi news genre. All this has forced TV Today to compete harder and spend more in order to maintain its already deteriorating market share. Just to put things in perspective, the company’s channel ‘Aaj Tak’ has lost its clear dominance, which can be gauged from the fact that it has been consistently losing market share over the last couple of years from near 55% levels to the current approximate 28% in terms of Hindi news viewership.

Net profit:  The bottomline of the company registered a loss during the quarter primarily affected by the poor operating performance. While there has been a 50% rise in depreciation expenses, which could be attributed to the addition of vans to increase coverage and reach, interest outgo continues to remain negligible. Further, it must be noted that the bottomline would have had been much worse but for the sharp rise in the other income component.

What to expect?
At Rs 90, the stock is trading at a P/E multiple of 51.8x its 1HFY05 annualised earnings. TV Today is primarily a news broadcasting company with ad revenues forming almost its entire topline. Thus, the strong base of advertisers for the company’s news channels is a big positive. Though competition is likely to continue, we feel that in the medium term, the company is relatively well placed to face the competition in the Hindi news genre on the back of its strong brand value and its style of delivering news. However, investors should keep in mind the relatively higher risk profile of the company owing to lack of diversification, as well as its reliance on one channel (Aaj Tak) for revenues.

Equitymaster requests your view! Post a comment on "TV Today: Disappointing slot". Click here!


More Views on News

TV TODAY NETWORK 2020-21 Annual Report Analysis (Annual Result Update)

Nov 3, 2021 | Updated on Nov 3, 2021

Here's an analysis of the annual report of TV TODAY NETWORK for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of TV TODAY NETWORK. Also includes updates on the valuation of TV TODAY NETWORK.

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.

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.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

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.


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


Nov 29, 2021 (Close)


  • Track your investment in TV TODAY NETWORK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks