Television 18 (TV 18) is approaching the public with an Initial Public Offering (IPO) priced at Rs.180/- per share aggregating Rs. 528.5 m. The company is promoted by Raghav Bahl who has over 15 years experience in television and journalism.
His career in media took off as a correspondent with Doordarshan, India’s state-run terrestrial broadcaster. He also anchored the once popular video magazine-Newstrack. He went on to become the executive director of Business India Television and produced the Business India Show and Business AM on Doordarshan, the state-controlled TV channel.
The company has a joint venture with CNBC Asia in which it holds a 49% stake, the balance being controlled by Business News (Asia) promoted by GE and Dow Jones. The channel CNBC India is an India dedicated feed of CNBC Asia.
TV 18 produces the popular business programmes for CNBC India such as 'India Business Day', 'India Talks', 'The Indian Manager 2000' and recently ‘Bazaar’ which gives a live coverage of the market. As far as entertainment goes, it has produced serials such as 'Amul India Show' (for Star Plus) 'Public Demand' (for Zee TV) and ‘Bhanwar’ (for Sony) etc. It has also produced live shows such as 'Femina Miss India', Sansui Viewers Choice etc.
While the copyright of all that goes on broadcast remains with the joint venture, the copyright of what is not broadcast remains with TV 18. It is free to sell this to any other regional channel or broadcast it over the Internet.
The company gets its revenues by way of selling 50% of the advertising inventory of the channel. It recovers its costs and a pre-determined margins (33%) on the same. Even the revenue of multinationals spending out of their Indian budget accrues to TV 18. Another revenue stream accrues from the cable distributors who distribute the channel.
TV 18 writes off fully, the entire production costs on the entertainment programmes it produces and 95% of the production costs of its business programmes. The company reported a net profit of Rs.41.0 m on a turnover of Rs.175 m for the year ending September 1999. It is expecting net profit of Rs.113.6 m (EPS: 10.38, P/E 17.3 Rs.109.42 m) on a turnover of Rs.302.2 m for the year ended September 2000.
Given the current craze for media stocks the issue is expected to garner a good response, which may result in low allotments. However, those who enter the stock at the offer price can expect to get very good returns in the short term.
If the company lives up to its projections then the stock performance can be very rewarding.
Issue opens on: December 16, 1999
Issue closes on: December 21, 1999