Six Month Call
Investment Rationale
Major player in business news space
TV18 dominates the TV business news broadcasting space through its channels CNBC TV18 and Awaaz. The company has recently acquired newswire service of Crisil Marketwire, giving synergies to the business segment. Its Internet portals such as moneycontrol.com, poweryourtrade.com, easymf.com etc and its 40% stake in an e-broking JV with Ambit Capital gives scalability to the business model. A robust advertising growth is being seen due to the dominant position and with more than 60% of the advertising revenues coming from the English news channel while the rest from the Hindi channel. However I believe the biggest trigger will come from the pay revenues with penetration of CAS and DTH across India .
Global Broadcasting News gaining market share
To leverage the company's expertise in the news space along with the distribution and editorial strength and capture the English news space, the company launched an English news channel CNN-IBN in alliance with the CNN. In less than 15 months, the channel has garnered more than 35% market share and is giving NDTV 24x7 a tough time. The company has also acquired 45% stake in IBN7, a Hindi news channel and plans to enter the regional news space in near future. I believe the advertising market in the general news space is growing at a brisk pace and will benefit GBN in the long run.
Web 18 to unlock value
All Internet properties of TV 18 group reside in Web18, where 85% stake is held by TV18 India while the rest in GBN. The company has number of business portals such as moneycontrol.com , easymf.com, poweryourtrade.com, commoditiescontrol.com etc. These properties have synergies with the news channel, which brings eyeballs to the portals. Over last two years the company has acquired lots of website in the travel, recruitment, news, cricket, technology, e-ticketing etc. I believe the management will unlock value in this space in near future as currently these portals have revenue only from advertising front while subscription revenues while company is trying to increase subscription revenues.
Home Shopping Network to give diversification
The company has launched Shop18, an integrated home shopping network in partnership with SAIF partners, Asia 's largest PE player. This business would be an integrated model with television, internet and catalogue sales platform along with backend logistics management. With home shopping globally accounts to around 2-3% of the total retail market I see a great potential in scalability of this business in India as organized retail just comprises of 45 in India today.
JV with Viacom to hold Studio18
To widen the broadcasting bouquet the company has recently entered into a JV with Viacom having channels such as VH1, MTV and Nickelodeon in India . This JV will launch many more general entertainment channels and will house the company's film entertainment and distribution business Studio 18. Studio 18 has already been associated with movies such as Halla Bol , Bhootnath, Namastey London, Honeymoon Travels Pvt Ltd, 1971, etc. The JV will also house the Indian film company which will raise $100 million through an Alternative Investments Market (AIM) listing on the London Stock Exchange and will be involved in funding various entertainment products in India . With backing and international expertise of Viacom I reckon this JV will give Studio18 global presence.
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