X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
TV Today: Disappointing slot - 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?  

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) 2QFY04 2QFY05 Change 1HFY04 1HFY05 Change
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 tax 94 (18)   195 79 -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   5.2 1.7  
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 Announces Quarterly Results (4QFY19); Net Profit Down 38.0% (Quarterly Result Update)

May 24, 2019 | Updated on May 24, 2019

For the quarter ended March 2019, TV TODAY NETWORK has posted a net profit of Rs 202 m (down 38.0% YoY). Sales on the other hand came in at Rs 2 bn (down 8.6% YoY). Read on for a complete analysis of TV TODAY NETWORK's quarterly results.

TV TODAY NETWORK Announces Quarterly Results (3QFY19); Net Profit Up 9.7% (Quarterly Result Update)

Feb 15, 2019 | Updated on Feb 15, 2019

For the quarter ended December 2018, TV TODAY NETWORK has posted a net profit of Rs 392 m (up 9.7% YoY). Sales on the other hand came in at Rs 2 bn (up 14.9% YoY). Read on for a complete analysis of TV TODAY NETWORK's quarterly results.

TV TODAY NETWORK 2017-18 Annual Report Analysis (Annual Result Update)

Sep 19, 2018 | Updated on Sep 19, 2018

Here's an analysis of the annual report of TV TODAY NETWORK for 2017-18. 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.

GTPL Hathway Ltd. (IPO)

Jun 21, 2017

Should one subscribe to the IPO of GTPL Hathway Ltd?

More Views on News

Most Popular

My Top 7 Stocks to Profit from Sensex 100,000(The 5 Minute Wrapup)

May 16, 2019

Tanushree Banerjee explains everything you need to know about the Rebirth of India and Sensex 100,000.

3 Stocks to Bet on to Become a 'Dividend Millionaire'(Profit Hunter)

May 14, 2019

As markets continue to rattle amid earning season, upcoming elections, volatile crude price and US China trade war, it's a great idea to add some stability to your portfolio by adding dividend stocks.

Indian Steel: The Perfect Multibagger Opportunity(Profit Hunter)

May 17, 2019

A structurally strong Indian Steel Industry will help India achieve 8%+ GDP growth in the coming years.

My Top 7 Stocks to Buy as Modi Returns to Power(The 5 Minute Wrapup)

May 23, 2019

The Modi government is all set to come back to power. With a stable government at the centre, how should you play the stock market?

What Makes TVS Srichakra and CCL Products a Cut Above the Rest?(The 5 Minute Wrapup)

May 17, 2019

Despite the commodity nature of their businesses, these two stocks have rewarded shareholders well.

More

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

TV TODAY NETWORK SHARE PRICE


May 27, 2019 10:53 AM

TRACK TV TODAY NETWORK

  • 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

MORE ON TV TODAY NETWORK

TV TODAY NETWORK 8-QTR ANALYSIS

COMPARE TV TODAY NETWORK WITH

MARKET STATS