News broadcasting stocks rally on improving prospects

NDTV scrip zooms 20%, while other media rally between 5% and 15%

Shares of broadcasters rallied today after leading broadcasting company NDTV surprised the Street with its fourth quarter numbers and on hopes that the government’s digitisation efforts will help iron out critical issues impacting the sector.

The NDTV stock zoomed nearly 20 per cent to end at Rs 89.95. Yesterday, the company posted better-than-expected net profit of Rs 27.8 crore in the March quarter compared to a loss of Rs 41 crore during the same quarter last year.

Market experts said NDTV numbers triggered hopes of recovery for companies operating in this space, which include TV Today and TV18 Broadcast.

Other broadcasting stocks rallied between five per cent and 15 per cent today, with some even climbing to 52-week highs.

TV Today, part of the India Today group, which owns four channels, including Aaj Tak and Headlines Today, soared 13 per cent to Rs 85.35. Meanwhile, TV18 Broadcast, broadcasting arm of the Network18 group that owns channels like CNBC-TV18 and CNN-IBN, gained nearly eight per cent to Rs 31.05.

“Today’s rally was because of good numbers posted by NDTV. There are expectation that other players will also perform well,” said independent market analyst S P Tulsian.

Analysts said investors are betting on the success of digitisation, which is expected to drive subscription revenues and bring down carriage charges, which have been hurting broadcasters.

“The biggest beneficiary of digitisation will be broadcasters,” said Edelweiss analysts Sandeep Bhandari and Atul Mehra, in a report. “On the one hand, their subscription revenues will increase and on the other hand carriage and placement charges will drop.”

According to Edelweiss, the government’s efforts to digitise cable television, moving from cable operators to digital set top boxes, has been on track and is paying off.

The first phase, covering four cities has seen encouraging response. According to the ministry of information and broadcasting, Mumbai has seen 100 per digitisation and Delhi 97 per cent, while Kolkata and Chennai have seen 85 per cent each. The second phase, which will cover 38 cities, is expected to cover nearly three times more subscribes.

Digitisation is expected to bring in multiple benefits to news broadcasters. Under-reporting of subscribers is set to reduce, paving the way for higher subscription revenues. Also, carriage charges, as high as 35 per cent of revenue for some players, is set to come down sharply as channel-carrying capacity will increase to over 250 from just 100 on the analog platform.

“It’s a good time to invest in news broadcasters,” said an analyst requesting anonymity. “Media and ad spends are likely to increase in the run up to the

Lok Sabha elections. Also, news channels have been cutting costs and improving efficiencies.”