Sun TV Network Limited The Sun never sets in the South ! JUNE 2015 1 Disclaimer Some of the statements made in this presentation are forward-looking statements and are based on the current beliefs, assumptions, expectations, estimates, objectives and projections of the Directors and Management of Sun TV Network Ltd. (STNL) about its business and the industry and markets in which it operates. These forward-looking statements include, without limitation, statements relating to revenues and earnings. The words “believe”, “anticipate”, “expect”, “intend”, “estimate”, “project” and similar expressions are also intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of STNL and are difficult to predict. Consequently, actual results could differ materially from those expressed or forecast in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, changes in the regulatory environment and other business and operational risk. STNL does not undertake to update these forward-looking statements to reflect events or circumstances that may arise after publication. 2 Sun TV Network Business Verticals v Television Broadcasting v FM Radio Broadcasting v Movie Distribution/Production v SunRisers – Hyderabad – IPL Franchise 3 Corporate Structure Sun TV Network Ltd (Broadcasting , Production, Entertainment) 97.78 % 59.15 % subsidiary subsidiary Kal Radio Ltd (Radio) South Asia FM Ltd (Radio) 18 FM Radio licenses 23 FM Radio licenses Focused on southern cities Focused on Northern, Eastern & Western parts of the country Divisions of STNL Strategic alliance with RED FM (Radio) 48.9 % beneficial interest Sun Pictures SunRisers (Movie Hyderabad Distribution / (IPL Franchise) 3 FM Radio stations in Production) Mumbai, Delhi and Kolkata 4 Presence across genres in 4 States, 33 channels State / Language Tamil Nadu / Andhra Pradesh / Karnataka / Kerala / Channels Tamil Telugu Kannada Malayalam General Entertainment Movies News Music Kids Comedy High Definition Life Action Rest of India 5 Television Broadcasting 6 TV Broadcasting Outlook Revenues driven by Advertising and Subscription 2015P 2019P v Accounts for ~ 40% of total ad-spends in India driven by Hindi & Regional ad-spends TV Advertising spends v Entertainment genre continues to be the largest TV Advertising spends Rs 175 bn ad spend driver followed by news and sports Rs 299 bn v Emergence of “Targeted advertising” through Niche channels v Currently revenues concentrated with last mile v Digitalization will ensure broadcasters to claim TV Distribution market their legitimate share in the near future TV Distribution market v Alternate distribution platforms to fuel growth Rs 369 bn à DTH, CAS, HITS, IPTV Rs 676 bn v Overseas subscription à continues to offer a huge untapped growth opportunity Regional Broadcasters all set to benefit from increasing focus of national advertisers on India’s rising rural consumption and from digitalization of TV distribution space Source: KPMG / FICCI Media Report 2015 7 South India TV Broadcasting Enviable Viewership Share v South Indian Channels accounted for ~30 -32 % share of total viewership Fast growing Ad market v South Indian Channels enjoy ~22 % share of total Ad revenues, higher than viewership share v Addressable Ad market pegged at Rs ~60 billion, growing at a fast pace v Regional TV in the South strongly backed by Regional / Local advertisers along with National advertisers Large Subscription Revenue Potential v South India has over ~60 mn households, with C&S penetration of 83% v Digitization to enhance addressability of distribution market – a strong fillip to total subscription revenues Source: KPMG / FICCI Media Report 2015, Market Estimates 8 Sun TV Network’s Television Broadcasting Business 9 Leadership by a Huge Margin v Largest TV Network in South India; also the largest regional TV Network in India q Penetration, Viewership & Ad Revenues q Dominant Market Share in each of the States; v Well conceived strategy of segmenting the addressable market under way, ahead of digitization q Array of flanking channels across genres like Kids, Action, Comedy, Life. q Assortment of fiction and non-fiction content mixed with movies across channels. 10 Great Content + Sound Business Practices = Robust Business v An innate ability to stay ‘ahead of the curve’ q Anticipate and shape market trends q Innovation and leadership q State of the art technology v Absolute respect for Content q Access to variety of content q Exclusive contracts with leading content producers; an ecosystem that is fiercely loyal q A formidable movie library with perpetual and exclusive rights v Prudent Business Practices q Tight control on content costs; extremely conservative on leverage q Unique business model that mitigates risks 11 Strident Growth in Advertising Revenues v Advertising Revenue Ad market size q Increasing trends of higher ad Language (Rs bn) spends in the South Tamil 30.0 Telugu 20.0 q Medium of choice for large Kannada 6.0 advertisers in India. Malayalam 4.0 Total 60.0 Broadcasting Industry Revenue Sun TV Revenue (Rs bn) (Rs bn) 200 12.0 180 175 CAGR ~ 7.61% 11.4 CAGR: 11.18 % 10.7 155 10.0 10.5 160 9.7 136 9.5 140 8.0 116 125 120 103 7.9 100 6.0 80 60 4.0 40 2.0 20 0 0.0 FY10 FY11 FY12 FY13 FY14E FY15P FY10 FY11 FY12 FY13 FY14 FY15 Source: KPMG / FICCI Indian Media and Entertainment Industry Report 2015 /Television / Market Estimates 12 Television Distribution Platforms 13 Subscription revenues to drive growth Sun TV Subscription revenues v Over 60% share of Subscription revenue from South 9000 Rs. mn v Increasing DTH penetration 8000 v Digitization legislation is a disruptive upside; 7000 5265 6000 could treble Pay TV revenues in the near future. 4483 v 5000 Phase I and II completed with reasonable 2881 3326 3728 4000 success. 3000 1829 1962 2115 v Revenue opportunities from the South Indian 2000 2142 1630 1392 1569 diasporas in overseas markets being further 1000 1250 1377 560 690 843 1031 tapped. 0 FY10 FY11 FY12 FY13 FY14 FY15 Television C&S DTH Revenue Pay Channel Revenue Overseas Income Households households households TV HH and C&S penetration of TV HH 200 92% Language (mn) (mn) (mn) 196 180 90% 90% 160 88% 168 Tamil 17.7 16.4 15.9 140 161 86% 120 84% 100 82% 82% Telugu 20.9 15.1 14.8 80% 80 80% 60 78% Kannada 13.5 10.0 9.9 Millions households 40 76% 20 74% Malayalam 8.1 7.6 7.1 0 72% 2013 2014E 2019P Total 60.2 49.1 47.7 Television households (mm) Paid C&S penetration of TV households (mm) Source: KPMG / FICCI Indian Media and Entertainment Industry Report 2015 /Television - Market Estimates 14 Mandatory Digitization provides fillip to subscription revenues v Government of India has mandated digitization of TV distribution systems in India with the following timelines Deadline for Estimated homes Phase Cities Covered digitisation Total South 4 Metros (New Delhi, Mumbai, Chennai ~ 2 mn 1 Kolkata, Chennai) 30/10/2012 ~ 12 mn 38 Cities Bangalore /Mysore/ 2 (Population > 1Mn) 31/03/2013 ~ 22 mn Hyderabad/Vizag/ Coimbatore ~ 4 mn Other Urban Areas 31/12/2015 ~ 32 mn ~ 14 mn 3 Rest of India 31/12/2016 ~ 73 mn ~ 28 mn 4 Source: Ministry of Information Broadcasting / Market estimates v Mandatory Digitization legislation is a disruptive upside; could treble Pay TV revenues in the near future. v Phase I and II completed with reasonable success. v Phase III and IV extended to be completed on or before 31 Dec 2015 and 31 Dec 2016 respectively. Source: KPMG / FICCI Indian Media and Entertainment Industry Report 2015 /Television - Market Estimates 15 Digitisation . Digital penetration of Pay TV subscribers 100 100 100 100 99 % 90 80 Subscribers 77 60 57 40 28 20 0 Hong Malaysia Singapore Indonesia Japan Si Lanka Thailand India Kong Source: Credit Suisse report titled, India Media Sector, dated April 16, 2013 Pay TV penetration is surprisingly high India’s pay TV ARPU less than most countries’ 100 98 Pay TV penetration 100 TV households 80 Pay TV ARPU (USD) 80 83 60 60 54 50 80 40 48 40 71 35 35 56 20 20 20 16 20 0 3 7 India China Australia Korea Malaysia Thailand UK Vietnam 0 India China Malaysia Thailand Brazil UK USA Source: Asia Television Advertising, Credit Suisse estimates Source: PWC-CII Media Industry report 16 An Expanding Global Footprint Rogers Cable ,Bell Sun TV Network Europe Limited Echostar –Dish, Channel Live , IPTV, Yupp TV, VU Clip, Global Take Off, UAE –Gulf, Google Ireland Bom TV Malaysia -Measat Sri Lanka – MTV, Dialog Multichoice TV Africa Singapore - Measat Sun TV Australia, Fetch TV Paid subscriber base of over ~0.6 mn in overseas markets 17 F M Radio Broadcasting 18 India’s Largest FM Radio Network v Two subsidiaries q Kal Radio Limited and South Asia FM Limited v 46 stations operational q 7 stations under Brand Suryan FM in Tamil Nadu q 39 stations under Brand Red FM in the Rest of India v Strong Revenues from the Metro stations q Metro stations account for 50% of total Radio Revenues v Well poised in mini metros q Future growth to be driven by mini metros 19 India’s Largest FM Radio Network With a Pan India Footprint 20 India’s Largest FM Radio Network With a Pan India Footprint – 46 stations Karnataka & Tamil Nadu & West - 8 North & East - 16 Andhra Pradesh -13 Kerala - 9 • Chennai • Bangalore • Ahmedabad • Allahabad • Asansol • Coimbatore • Cochin • Aurangabad • Gulbarga • Jaipur • Bhopal • Hyderabad • Bhubaneswar • Kannur • Madurai • Mumbai