The Telecom Regulatory Authority of India's (Trai) latest order on broadcasting and cable services that came into force on February 1 is more about offering options to customers rather than being pocket-friendly, analysts say.
According to the new guidelines, starting February 1, customers will have a choice to select and pay for only those channels that they want to watch, instead of paying for the entire pack imposed by the direct-to-home (DTH) or cable TV operators.
Though analysts have welcomed the move as it will bring transparency and options for customers to choose a la carte channels or bouquets, they feel the customers may eventually end up paying more.
"If a customer wants to watch only six channels, then it is beneficial for her as she will pay only for those six channels. But, if one chooses five channels and out of that, four were already available in the existing pack and along with that they had an option of exploring, surfing multiple channels, what was bad in that," says an expert requesting anonymity.
IMPACT ON DTH/CHANNELS
Most analysts are of the view that there won't be any substantial decline in the companies'revenue as the move is subjective in nature. Instead, the new order may see the companies get more aggressive as regards their pricing structure and target more customers to increase market share.
Stock prices of most of the channels and operators have fallen sharply in the last one year. Going forward, these stocks may see a knee-jerk reaction once the new rules are in place, analysts say.
"The new rules will see average revenue per users (ARPUs) increasing; however, at the same time it will also increase the churn rate in the customers' base. The new regulation will be positive for DTH players in the long-term, but will hurt MSOs," says Sanjeev Hota, AVP Research at Sharekhan, by BNP Paribas.
"On the technical front, shares of Sun TV are trading under pressure and we expect a downside target for Rs 480 levels while Rs 15 levels for DISH TV for the short term ahead," said Dr Ravi Singh, head of research at Karvy Broking.
Among the lot, analysts remain bullish on Zee Entertainment despite the recent developments.
"We believe medium-to longer-term performance still depends on the strategic partner deal structure, which is still uncertain. We revise to Buy from Accumulate citing inexpensive valuations, with a new target price of Rs 490 from Rs 535 on 23x (from 25x) FY20E P/E — a slightly lower multiple after factoring in the uncertainty. Our earnings estimates remain unchanged," say analysts at Elara Capital.
Here's how stocks have performed in the last one year -
|Company Name||Date||Closing price||Date||Closing||% change|
|BAG Films & Media Ltd.||01-Feb-2019||4.44||01-Feb-2018||5.58||-20.43|
|Balaji Telefilms Ltd.||01-Feb-2019||89.30||01-Feb-2018||145.75||-38.73|
|Colorchips New Media Ltd.||01-Feb-2019||67.35||01-Feb-2018||395.00||-82.95|
|Den Networks Ltd.||01-Feb-2019||71.75||01-Feb-2018||106.75||-32.79|
|Dish TV India Ltd.||01-Feb-2019||24.40||01-Feb-2018||77.30||-68.43|
|Entertainment Network (India) Ltd.||01-Feb-2019||567.15||01-Feb-2018||721.05||-21.34|
|Hathway Cable & Datacom Ltd.||01-Feb-2019||32.00||01-Feb-2018||38.30||-16.45|
|Music Broadcast Ltd.||01-Feb-2019||298.50||01-Feb-2018||387.95||-23.06|
|New Delhi Television Ltd.||01-Feb-2019||35.00||01-Feb-2018||42.15||-16.96|
|Ortel Communications Ltd.||01-Feb-2019||4.40||01-Feb-2018||31.55||-86.05|
|Raj Television Network Ltd.||01-Feb-2019||50.65||01-Feb-2018||57.85||-12.45|
|Sahara One Media & Entertainment Ltd.||29-Jan-2019||19.45||01-Feb-2018||52.00||-62.60|
|Siti Networks Ltd.||01-Feb-2019||6.25||01-Feb-2018||22.55||-72.28|
|Sun TV Network Ltd.||01-Feb-2019||532.15||01-Feb-2018||1012.90||-47.46|
|TV Today Network Ltd.||01-Feb-2019||351.60||01-Feb-2018||452.65||-22.32|
|TV Vision Ltd.||01-Feb-2019||3.18||01-Feb-2018||20.80||-84.71|
|TV18 Broadcast Ltd.||01-Feb-2019||32.65||01-Feb-2018||59.70||-45.31|
|UFO Moviez India Ltd.||01-Feb-2019||247.50||01-Feb-2018||456.10||-45.74|
|Zee Entertainment Enterprises Ltd.||01-Feb-2019||356.50||01-Feb-2018||595.10||-40.09|
|Zee Media Corporation Ltd.||01-Feb-2019||13.14||01-Feb-2018||43.70||-69.93|