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Mediaone Global Entertainment Ltd.

BSE: 503685 Sector: Media
NSE: N.A. ISIN Code: INE828I01019
BSE 00:00 | 04 Mar Mediaone Global Entertainment Ltd
NSE 05:30 | 01 Jan Mediaone Global Entertainment Ltd
OPEN 16.00
PREVIOUS CLOSE 15.90
VOLUME 359
52-Week high 16.80
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 23
Buy Price 15.90
Buy Qty 291.00
Sell Price 0.00
Sell Qty 0.00
OPEN 16.00
CLOSE 15.90
VOLUME 359
52-Week high 16.80
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 23
Buy Price 15.90
Buy Qty 291.00
Sell Price 0.00
Sell Qty 0.00

Mediaone Global Entertainment Ltd. (MEDIAONEGLOBAL) - Chairman Speech

Company chairman speech

Dear Shareholders, Greetings

It gives me immense pleasure to welcome you all to the 31st Annual GeneralMeeting of your company. Over the last few years, your company has been recordingconsisting growth in Income and Profits. I now take the privilege to comment on thecompany performance during the financial year 2011-2012.

Business Model

Mediaone's business model consists of the following distinct business propositions:

Production of films

Distribution of films

Exhibition of films

Production of films

Mediaone's business model in production of films is unique that draws on thecompetencies of its management in project and financial management, understanding of theentertainment landscape and expertise in film production management.

The company only acts as a producer to produce the film on behalf of investors andMulti-national companies, for a fee and percentage of the profit. Thus the companyeffectively mitigates risks, which are generally associated with the success or thefailure in the production of films. The company has entered in to a contract to producefilms for Eros International, UK (company listed in AIMS) to produce films for them onturnkey basis.

Distribution of films

Mediaone acts as a Distributor to Multinational companies/ corporate houses working fora fee which is a percentage of the collections. Thus the company effectively mitigatesrisks involved in distribution segment of the business.

Exhibition of Films

Mediaone aims to carve a unique space in mass access using theatre infrastructure todeliver entertainment. Mediaone owns a chain of theaters in Kanchipuram, Achirapakkam,Thiruvalengadu and manages BIG cinemas chain of 34 theaters in Pondicherry,Vellore, Salem, Madurai, Sivakasi, Dindugal, Tanjore, Chengi, kallakurichi, Thiruporur,Manali etc. Mediaone takes over run down theaters on lease and spends money to modernizethe theatres including the digitalization.

Strategy

Mediaone's strategy is to build an asset based integrated entertainment companyfocusing on:

Acquisition of Multiplexes in the malls in around Chennai city and other major towns ofTamilnadu.

Buying / Leasing old theatres predominantly in monopoly centres, to modernize them intoDigital theatres, with state of art sound and light system, with good facilities.

The strategy is to become a theatre chain company having presence in all categories oftheatres including Malls, Multiplexes, Cineplexes and stand-alone theatres. Mediaone wouldacquire theatres on outright basis/ long lease basis and improve the infrastructure tobring it at par with world-class standards to offer high quality viewing experience.

Mediaone would convert films in to Digital, transmit these films using satellite mediumto various theatres in a secured encryption mode. Using digital rights management,Mediaone would exhibit the films in digital mode without physical film prints. This wouldalso help to kill pirated CD market as new films can be released simultaneously acrossmany places.

Location is as critical as content for the success of a multiplex business. Whileselection of right content helps in reaching out to the right target, selection of rightlocation results in attracting higher footfalls. All our multiplexes would be located inhigh traffic commercial business districts or in the midst of affluent residential areas,which would provide us with a competitive advantage

Uniqueness of the Business Plan

Perceived as a volatile business due to the traditionally unorganized stamp that thefilm industry has earned over the years, companies like Mediaone have had to redefine therules of the game by adopting a derisked strategy for its business in the following ways:

Production: Mediaone offers pre-production, production, and post-production activitiesfor the Investors/ MNCs for a fixed fee and profit sharing terms. The Investor/ MNC willinvest the money for the movie production, and will reap the entire profits from theoperation. The Investor/ MNC also bear the risk of poor performance at the box office.Mediaone will use its industry experience to produce a commercially viable movie in alocal language. Depending on the financial outlay and the risk appetite of the Investor/MNC, Mediaone will offer a choice of high star power movie (higher cost, lower risk,immense upside potential and immense downside potential) or a low star power movie (lowcost, high risk, limited upside potential, limited downside potential). Mediaone will workon all stages of the movie making, right from script selection to cast selection to actualproduction up till the movie is ready for release. In return for its services, Mediaonewill earn a fixed fee which is generally a percentage of the cost of the movie and alsoprofit sharing as per pre-agreed terms.

Distribution of films: The distributor acts as a cushion between the producer and theexhibitioner. While the exhibitioner will not be interested in paying upfront for a moviewhose performance is uncertain, the producer's funds get locked up until the movieperforms. Hence, the distributor acts as a link and takes up the movie either on anoutright basis or a profit sharing with or without minimum guarantee basis from theproducer, and circulates the movie for distribution among theatres in the area. Mediaonefollows a strategy of only distributing films on prefixed percentage on collection basiswithout minimum guarantee.

Exhibition: The Prime focus is acquiring theatres in Bl and B2 centers of Tamil Naduand converting them into modern digital theatres with state of the art viewing experience.The idea is to extend the innovative approach in screening of new movies simultaneously inBl and B2 centers at par with A centers and providing an opportunity to viewers acrossvarious categories of centers in Tamil Nadu and encashing on the initial publicity.

Flowing from its goal of emerging as one of India's lead studios, Mediaone has focusedon creating a brand name, which is synonymous with quality and successful cinema. Tocontinuously strengthen its core competencies, Mediaone has indigenously evolved a seriesof processes that are periodically fine-tuned and are applicable to a project from idea torelease.

Projects to date:

1. Production of Movies:

Mirattal (2012-2013) starring Vinay, Sharmila music by Praveen Mani Directed by Madesh

Chikku Bhukku (2010-2011) starring Arya, Shriya Saran; Music by Colonial cousins;Directed by Manigandan

Dhaam Dhoom (2008-2009), Tamil starring Jayam Ravi, Kangana Ranawat; Music by HarrisJayaraj; Directed byJeeva..

Provoked ( 2006-2007) starring Aishwarya Rai , Oscar award winning actor MiranadaRichardson, Music by AR Rahman Directed by Jag Mundhra .

RAMJI LONDON WALEY (2004-2005) Hindi Film starring : Madhavan, Samita Bhangargi MusicVishal Bhardwaj DirSanjay Dayama.

2. Distribution of Films:

Mediaone has distributed recently successful films like Nanban, Kadhalil SodapuvathuYeppadi, Thadayara Thakka, Mirattal, Maattrraan and Thuppaki in Tamil, English Vinglish,and Student of the year, Agnipath, Housefull 2, Cocktail, Vicky Donor and Ra One in Hindi.In both Tamil and Hindi, the blend of films have been between small, medium and bigbudget. Also Films like Kadhalil Sodapuvathu Yeppadi in Tamil and Vicky Donor in Hindihave been niche successes. The company selects films for distribution based on content,star cast and budget and it is a risk free model since the distribution is on pre fixedpercentage on collection basis without minimum guarantee.

Industry Outlook

The Indian film industry has recovered from a two year slowdown in 2011. A steadyincrease in average ticket price on account of the growing multiplex culture, increasingcontent with mass connect, star-power and digitization facilitated countrywide releases,all contributed their part in this turnaround.

The Indian film industry was estimated to be INR 93 Billion in 2011 indicating a growthof 11.5 percent vis-d-vis 2010. Quality content combined with the revival of films withmass connect improved the occupancy rates which in-turn increased domestic box-officecollections.

Indian production houses such as Eros, Reliance and UTV along with joint ventures offoreign media houses such as Fox and Viacom 18 have brought in increased sophisticationacross the industry value chain through processes such as stricter financial discipline,regular audits, scientific methods for marketing and distribution and developing newtalent. In addition, they continue to explore additional monetization channels to taplatent demand for Indian films. Production houses are getting involved right from thescripting stage till release for large budget films to control costs, where as theycontinue to directly source quality smaller budget films from independent producers.

There is an increasing trend towards opting for co-productions in the Indian market asit seen to provide a win-win situation for both the production house and the studio. Eachget's to leverage his strength the production house get's to focus entirely on the task ofproducing a good quality film with the studio simultaneously exploring and implementingthe best distribution and marketing strategies for its release.

With best wishes

SURYARAJ KUMAR

Managing Director

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