Sun TV stock up by over 10% on hopes of increased IPL revenues, viewership

Firm expecting 30% increase in revenue earnings from IPL

The Kalanithi Maran-owned Sun TV's stock rose by around 10.15 per cent on Friday. The triggers include digitisation and an estimated 30 per cent increase in revenues from the latest season of the Indian Premiers League (IPL) in 2017.

Company's stock rose to Rs 768, up by Rs 70.90 on Friday afternoon. 

    

The development came after news broke that Tamil Nadu Arasu Cable TV Corporation, which is still to get a permanent digital licence necessary for a multiple system operator (MSO), is formally launching its digital system.

In its annual report for the year 2016-17, Sun TV said that the ongoing digitalisation of content and the shift to online and mobile distribution, among others create favourable opportunities to serve customers in new markets. Growth was also owing to the large population of the Indian diaspora across various locales in other countries. 

The drive initiated by the government towards digitalisation and addressability of cable television is expected to help Sun TV Network, which is touted to be the largest television network in the southern region. Growth in the Direct-To-Home (DTH) platform is expected to spill benefits for the Sun TV, as a new stream of revenues is likely to give the media firm a positive momentum in the coming years.  

Meanwhile, the CLSA report stated that the Indian Premier League (IPL), the most-watched sports event, is prepared to initiate the process of re-bidding for distributing broadcast rights for TV and digital platforms. The auction is slated to take place on September 4. Around 24 bidders will be lining up for the bid. 

Broadcasting rights that have a tenure of 5 years are expected to be more expensive, marking a three-fold rise for the television platform. Sony had so far held the rights to broadcast IPL matches on its platform.

As far as the digital platform is concerned, bidding entities are likely to pay 2-5 times higher than what the erstwhile broadcast partner Hotstar was paying.   

Higher rights are expected boost IPL franchise’s revenues by 70-110 per cent. 

"Sun TV owns an IPL team and we are already factoring in a 30 per cent increase in its IPL revenues, assuming rights sale at Rs 9,500 crore in FY19," said the company report while adding that there could be an upside of another 2 per cent to its FY19 consolidated earnings forecast, in case rights are sold for Rs 12,500 crore.

At present, the company has the license to operate an IPL franchise “Sun Risers Hyderabad”. During FY17, the firm earned Rs 150.99 crore from the IPL season via sale of services. In the preceding year, earnings from the segment stood at Rs 96.30 crore.