Sector Update
January 11, 2019
Key events to watch in Q4FY19 Media
Box office collections of key movies Uri, Thackeray, Manikarnika, Super 30, Gully Boy, Total Dhamaal, Badla in Lot of moving variables ahead… Q4FY19 Q3FY19 was a news heavy quarter for the media sector with new flows Deal pipeline of Zee5 and Technology annoucement of Zee such as deferral of tariff order implementation (to be implemented by Entertainment February 1, 2019), fund raising announcements by multiplexes, GST rate Implementation of Trai tariff order effective from February 1, cut, etc, hogging the limelight. Notably, the market share (BARC rating – 2019 taking into account top five players) of Sun TV in Q3FY19, in its core Moderation of newsprint prices in Q4 and tailwinds of market of Tamil Nadu continued to slide and is now below 40% (300 bps election related spends QoQ decline to 39.4%) while Zee Tamil improved 150 bps QoQ to 21.6%. Any uptick on footfalls on account of GST rate cut on cinema Zee continues to enjoy healthy viewership growth trends in some key tickets effective from January 1, 2019 markets of Marathi and Oriya and giving tough competition to the ABP group in the Bengali market. In the Telugu market, Star Maa (Star group) continued its market share gain while Sun TV owned Gemini TV continued to lose. Aaj Tak maintained its leadership in the Hindi news segment, albeit viewership share came down while News18 India continued its viewership gain momentum. Net domestic box office collections for the Research Analyst quarter remained healthy despite the high base of Q3FY18. Newsprint
Bhupendra Tiwary prices, as per management, have reversed and are ~15% down from [email protected] peak prices, the benefits of which are likely to fully seen from Q1FY20 onwards. Going ahead, we expect a multitude of variables such as impact Sameer Pardikar [email protected] of Trai tariff implementation and OTT space expansion in broadcasting space, multiplexes capital raising & deployment plans, election led tailwinds to advertisement (across segments) to determine the way ahead. Zee market share gain continues; inches closer to leader in Bengali Zee Entertainment continued to witness a rise in some of its key markets including Marathi (Zee Marathi, Zee Talkies) where its market share improved 50 bps QoQ to 60.6% in Q3FY19. At least three shows of Zee were among top five Hindi GEC shows during all the weeks of the quarter. In the Bengali market, the viewership share of Zee Group (Zee Bangla, Zee Bangla Cinema) continued to be healthy at 42% while that of STAR group improved 20 bps to 43.5%. In the Tamil market, Zee Tamil continued to give stiff competition to market leader, Sun TV, on account of which market share of Sun TV now fell below 40%, to 39.4% while that of Zee Tamil improved 150 bps QoQ to 21.6% The viewership share for Zee Tamil has improved nearly 770 bps since Q3FY18. Aaj Tak maintains leadership in Hindi news; News18 catching up In the Hindi news segment, Aaj Tak maintained its leadership position with 24.7% viewership share, albeit its market share declined 180 bps QoQ. The viewership share for Zee News has declined 40 bps QoQ to 18.3%. That of ABP News improved 70 bps to 19.3%. News18 India has been improving its market share impressively and has now secured No. 2 position. Viewership share for the channel improved 150 bps QoQ and 330 bps YoY to 19.9% now. Strong box office collections; multiplexes step up growth plans Despite high base, box office collections (ex- regional) for Q3FY19 were at | 990 crore, up ~15% YoY. The collections were led by healthy box office performance from 2.0 (Hindi collections of ~| 188 crore) and ‘surprisingly healthy collections from Badhaai Ho, which collected ~| 136 crore during the quarter. Top five movies contributed ~64% box office collection for the quarter. Inox also recently raised | 160 crore by allotting 6.4 million shares to parent GFCL at | 250 per share. Similarly, PVR is also seeking to raise ~| 750 crore, largely to accelerate the screen addition rollout ahead. We also note that PVR’s management, in the media, indicated an investment of ~| 2500-3000 crore in the next three to five-year horizon specifically targeting exhibition opportunity in Tier II/III cities in India.
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Some developments in OTT space during quarter i) Netflix has announced a content slate of 32 originals in India, ii) Reliance Jio expanded its content slate with Disney deal, iii) Shemaroo’s OTT service ‘ShemarooMe’ is slated to be launched in Q12019, iv) Eros Now intends to launch 50 short-format series by 2019, v) ZEE5 launched 20% discount offer for Australia, Singapore markets, vi) ZEE5 inked strategic tie-up with Zeasn to bolster its presence in Asia, ME, Africa while vii) Balaji Telefilms invested | 450 crore in ALTBalaji till September
BARC ratings market share (based on Top five)
Exhibit 1: Tamil market trend
Viewership market Share of Sun TV has fallen below 40% 50 47.0 46.2 now. Zee Tamil continued to gain. Market share is at 21.6% 45 43.0 42.5 40 39.4 35 30
(%) 25 21.6 20 18.5 20.1 16.5 15 13.9 10 5 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
Sun TV STAR Vijay KTV Zee Tamil
es Source: BARC, ICICI Direct Research
Exhibit 2: Telugu market trend
In a competitive Telugu market, Star Maa gained viewership market share rapidly while viewership market 30 share of Zee Telugu was steady at 22.6% 29.0 28 27.3 26 23.4 24.9 24 24.2 24.0 (%) 23.6 22.5 22.8 22.6 22 22.6 21.8 20.7 20.7 20 19.9
18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
STAR Maa ETV Telugu Gemini TV Zee Telugu
Source: BARC, ICICI Direct Research
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Exhibit 3: Kannada market trend
In the Kannada market, viewership market share of Zee 33.4 Kannada continued to improve and is now almost at par 34 32.9 31.3 32.6 32.5 31.2 31.3 with Sun TV owned Udaya. Colors Kannada has maintained 32 32.5 its leadership 30 29.0 28.6 28 31.0
(%) 27.2 26 24 23.1 23.0 22 21.5 20 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
Colors Kannada Zee Kannada Udaya Movies + Udaya TV
Source: BARC, ICICI Direct Research
Exhibit 4: Marathi market trend
Zee maintained undisputed leadership in the Marathi 62.8 60 59.9 60.1 60.6 market with viewership market share continuing to be over 57.4 60% (Zee Marathi + Zee Talkies) 50
40 (%) 30
20 17.5 17.3 14.6 16.8 16.8 14.9 16.9 16.5 10 15.5 15.8 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
Zee Marathi + Zee Talkies Colors Marathi STAR Pravah
Source: BARC, ICICI Direct Research
Exhibit 5: Bengali market trend
65 58.8 55 Viewership market share for the Zee group improved more 49.7 49.9 than 1000 bps YoY, almost at par with the market leader 45 43.2 43.5 42.2 42.0 i.e. STAR group 35 36.1 35.8 (%) 31.5 25
15 5 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
STAR Jalsha +Jalsha Movies Zee Bangla + Bangla cinema
Colors Bangla
Source: BARC, ICICI Direct Research
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Aaj Tak maintained its leadership, albeit with some Exhibit 6: Hindi news market trend moderation in viewership market share while News18 India is now at the No. 2 position
28 26.5 25.5 24.8 24.7
23 23.7 (%) 19.9 18 18.1 18.4 16.6 15.8
13 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
Aaj Tak Zee News ABP News
India TV News18 India
Source: BARC, ICICI Direct Research
Exhibit 7: English news market trend
39 36.5 35.3 36.1 34 34.2 34.2 30.4 31.3 29 29.4 29.0 29.1
(%) 24 19 16.5 14 14.2 14.3 14.7 14.0 11.8 11.5 10.3 10.9 9 9.3 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19
‘Republic’ and ‘Times Now’ remained at No 1 and 2 Republic TV Times Now position while TV Today owned India Today continued to India Today Television CNN News18 be a laggard Source: BARC, ICICI Direct Research
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Exhibit 8: Movie collection trend
Q1FY18 Collections (| cr) Q1FY19 Collections (| cr) YoY (%) Baahubali 2 511 Avengers: Infinity War 223 Tubelight 121 Race 3 161 The Fate Of The Furious 77 Raazi 123 Key movies for Q4FY19- Uri, Thackeray, Manikarnika, Hindi Medium 69 Baaghi 2 120 Super 30, Gully Boy, Total Dhamaal, Badla Half Girlfriend 60 Veere Di Wedding 80 Others 175 Others 436 Total Collections 1,014 Total Collections 1,143 12.7
Q2FY18 Collections (| cr) Q2FY19 Collections (| cr) Toilet - Ek Prem Katha 134 Sanju* 268 Baadshaho 78 Stree 127 Jab Harry Met Sejal 63 Gold 107 Mubarakan 55 Satyameva Jayate 89 Jagga Jasoos 53 Mission: Impossible - Fallout 77 Others 458 Others 372 Total Collections 840 Total Collections 1,040 23.9
Q3FY18 Collections (| cr) Q2FY19 Collections (| cr) Tiger Zinda Hai* 252 2.0(Hindi) 188 Golmaal Again 206 Thugs of Hindustan 145 Judwaa 2* 101 Badhai Ho 137 Fukrey Returns 79 Simba* 96 Secret Superstar 62 Zero* 95 Others 197 Others 366 Total Collections 897 Total Collections 1,027 14.6
Q4FY18 Collections (| cr) Padmaavat 300 Sonu Ke Titu Ki Sweety 102 Raid 97 Tiger Zinda Hai* 87 PadMan 79 Others 253 Total Collections 918
* collections during the quarter
Source: Koimoi.com, ICICI Direct Research
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Exhibit 9: Key OTT developments
Company News Netflix India Netflix gets aggressive in Netflix is scaling up its original content offering in the Indian market and has finalised an ambitious India with a content slate of slate of 12 series and 20 original local language films, which are in various stages of production 32 originals
Reliance Jio Reliance Jio expands content Reliance Jio inked a content deal with Disney India .Through this association, Jio users can get slate with Disney deal access to stories ranging from Disney Classics, Pixar animation, movies from Marvel and Star Wars along with a host of international as well as locally created content
Shemaroo Entertainment Shemaroo’s OTT service Shemaroo is launching its OTT platform in Q1CY19. With the launch of its OTT platform, Shemaroo ‘ShemarooMe’ slated to will be expanding the digital business through strategic partnerships to offer exciting content launch in Q119 across multiple platforms catering to the target audience
Eros Now Eros Now intends to launch Eros Now is further expanding its content strategy with the launch of Eros Now Quickie. Eros Now 50 short-format series by will launch over 50 Quickie series set to roll out by 2019 2019 Zee5 ZEE5 launches 20% discount As part of the ZEE5 ‘Christmas Bonanza’, audiences across these two countries will have access offer for Australia, Singapore to 1,00,000 hours of on-demand content across 12 languages for 7.99 AUD/month and 7.98 markets SGD/month against 9.99 AUD/month and 9.98 SGD/month Zee5 ZEE5 inks strategic tie-up ZEE5 has inked a key strategic alliance with Zeasn, the leading home digital entertainment service with Zeasn to bolster provider. The partnership will make ZEE5 accessible to 2.5 million Zeasn devices across Asia, the presence in Asia, ME, Africa Middle East and Africa
Dharma Production Dharma Productions ventures Karan Johar’s Dharma Productions has launched a digital content company called Dharmatic into digital content production Entertainment. The company will now create digital content for digital channels.
Balaji Telefilms Balaji Telefilms invests | 450 Balaji Telefilms has so far invested | 450 crore in its OTT platform ALTBalaji till now and the cr in ALTBalaji till September company intends to invest | 150 crore every year in the OTT business
Source: Televisionpost.com, ICICI Direct Research
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ICICI Direct research coverage universe (Media) CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) Sector / Company (|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E DB Corp (DBCORP) 174 215 Buy 3,202 17.1 15.0 19.5 10.2 11.6 8.9 5.3 6.4 4.7 23.1 22.6 26.9 16.3 16.2 19.0 DISH TV (DISHTV) 40 42 Hold 7,347 -0.4 0.8 2.1 47.1 19.4 7.4 4.3 3.8 3.1 8.8 10.4 0.1 2.4 5.4 ENIL (ENTNET) 597 690 Hold 2,846 7.5 12.1 22.3 79.9 49.4 26.8 23.8 19.3 12.6 6.2 9.0 15.1 3.5 6.1 10.2 Inox Leisure (INOX) 250 260 Buy 2,407 11.9 8.9 11.5 21.0 28.0 21.8 12.8 11.4 9.5 13.2 13.2 14.7 10.6 11.4 12.8 Jagran Praka (JAGPRA) 116 130 Hold 3,612 10.6 9.6 8.3 10.9 12.0 13.9 5.5 6.2 6.7 18.9 18.6 16.7 16.1 14.7 12.3 Music Broadcast (MUSBRO) 300 450 Buy 1,712 9.1 10.4 14.4 33.1 28.9 20.8 15.8 13.6 10.7 14.3 14.3 19.5 8.6 9.0 12.6 PVR (PVRLIM) 1,644 1,385 Hold 7,681 26.4 33.6 43.4 62.3 48.9 37.9 21.1 17.1 13.8 14.7 12.6 15.5 11.5 12.8 14.3 Sun TV (SUNTV) 588 675 Hold 23,152 28.8 36.9 37.5 20.4 15.9 15.7 10.6 8.2 7.4 35.5 37.7 33.0 24.2 25.6 22.1 TV Today (TVTNET) 368 450 Buy 2,196 19.9 25.7 29.8 18.5 14.3 12.3 9.6 7.7 5.9 30.4 30.2 29.8 19.3 19.5 19.0 ZEE Ent. (ZEEENT) 450 500 Buy 43,232 15.4 15.6 20.2 29.2 28.8 22.3 19.4 15.6 13.1 25.6 24.7 25.7 15.3 14.7 16.1 Source: Company, ICICI Direct Research
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RATING RATIONALE ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
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