The last write up I did on TV 18 brought some very positive feedback. How ever many of the people who mailed or messaged me had some serious queries about why I have never written nor commented about the other media stocks namely TV Today, NDTV, Mukta Arts and Balaji telefilm. Excepting Balaji and NDTV I have serious reservations against the working and operations of the other companies. I propose to talk only on the business operation point of view since the financials are already known to all of us.

Balaji Telefilm (CMP Rs 109 ): As Sajan mentioned Balaji is an excellent company with about a quarter of its market cap in cash holding, great franchisee, superior management but some how their deal with STAR has worked for Balaji both ways.

On the positive side they get to produce more programs for STAR TV  - talk shows, games, entertainment and of course their soaps.

On the other hand whenever a company enters into a strategic alliance with its buyer / supplier it loses pricing power. Dominant buyer s will always give in to ensure you are alive but never more then that. Balaji cannot negotiate with STAR on rates the way it would have done had STAR not been a substantial shareholder. In that case Balaji could have used its bargaining power much more effectively.

More over Balaji has been mostly successful in initiating concepts relating to family melodrama, kitchen politics and the likes. Of late the large number of people that I meet says that they have started losing interest in these serials. Recently the TAM ratings confirmed ZEE to be in the number 1 position in cable TV network above STAR

While Balaji remains an excellent pick for investors looking at minimizing downside risks the problem with the company is getting into newer areas of growth. Media as an industry is one where one thing does not work all the time and that is where management has to sit back and think of newer areas. Also the volume expansion in Balaji as with most broadcasters is an area of  concern. The prime time band is fixed for 2 hours each day and therefore all channels compete for the same time band. So a company that has an assured buyer with limited volume growth and moderate to stable pricing power would find it difficult to grow at above market rates of growth. More over the market will resist from higher discounting multiples to this company.

The event risk associated with Ekta Kapoor is also very high.

NDTV (CMP Rs 153): This is another stock where the concepts are in place but the management seems to have lost it a bit after Rajdeep Sardesai’s exit. The company lost the number 1 position in English news, slipped a few points in its Hindi news space and seems to be just about managing to stay where it was in its business news channel.

Recently Prannoy Roy’s expansion in Media BPO in partnership with Pramode Bhasin has opened up a huge opportunity. While volumes should not be a problem Media BPO is a low margin business so businesses would just about make reasonable return on capital employed.

While I am great believer in Prannoy Roy, NDTV does not seem to deliver on the results front. In case the company does not deliver the markets would take notice and de rate the stock down wards. NDTV has also made inroads in the FM Radio business by buying out Living World’s Red FM business and also by getting into production tie ups into South east Asia.

However I do like both the stocks mentioned above because the long term visibility seems to be in place.

TV Today (CMP Rs 80): Well this one is still the number one in the Hindi news space but its share is fast decreasing. It has slipped from a market share of 65%+ a few years back to almost 25% now. The English channel is losing money and while its peer groups are trying to get into a more diversified audience base TV Today is getting local. Its recent Delhi aajtak foray ahs gone nowhere in terms of the company’s operations and profitability.

An investor likes to hold stocks of companies that increase market share not of ones that give up. While media properties are valuable and cannot be calculated on the basis of PE ratios TV Today should do more then what it is currently doing  to offer solace to investors. The only positive thing about this stock is that it features in the list of Rakesh Jhunjhunwala’s holding.

NDTV and TV Today could immensely benefit once CAS is implemented but so would ZEE TV and TV 18.

Mukta Arts (Rs 41): Some years back Subhas Ghai wanted to raise money through an IPO which he did. I strongly feel that “one man one show” concept does not apply to listed companies, the event risk associated with Subhas Ghai is simply more then enough for any decent investor to get out of this stock. Here is an anomaly while the stock that Mr. Ghai sold during the IPO has unlimited life span (stocks are for ever) the underlying asset which this stock is dependent upon has finite time length (Mr. Ghai himself) . How could he have done an IPO on a single man is something that only Mr. Ghai could answer!

The earnings are lumpy for a major part of the last few quarters the company has been in the red. Moreover you need to see each movie that the company releases to decide where the stock will move. But right now the yadeen from kisna are none too convincing to recommend a buy or even a hold.

They are getting into TV production but there I would stay with a Balaji rather then buy Mukta Arts.

Please post in your coments!