Indian Media Industry -

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1

January 2010

QUARTERLY PERFORMANCE ANALYSIS OF COMPANIES

(October - December 2009)

INDIAN MEDIA INDUSTRY

Cygnus Business Consulting & Research Pvt. Ltd.Plot no. 8-3-948/949, 1st Floor, Solitaire Plaza, Behind Image Hospital, Ameerpet,

Hyderabad-500082, India; Tel: +91-40-23430203-05, Fax: +91-40-23430201,

E-mail: [email protected]; Website: www.cygnusindia.com

Disclaimer: All information contained in this report has been obtained from sources believed to be accurate by CygnusBusiness Consulting & Research Pvt. Ltd. (Cygnus). While reasonable care has been taken in its preparation, Cygnusmakes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any suchinformation. The information contained herein may be changed without notice. All information should be considered solelyas statements of opinion and Cygnus will not be liable for any loss incurred by users from any use of the publication orcontents.



QPAC - Indian Media Industry - October-December 2009

© Cygnus Business Consulting & Research Pvt. Ltd. 2010 2

EXECUTIVE SUMMARY .........................................................................................................3

INDUSTRY ANALYSIS ............................................................................................................4

OUTLOOK FOR THE SECTOR ...........................................................................................10

INTER-FIRM COMPARISON................................................................................................11

COMPANY ANALYSIS ..........................................................................................................15

1. HT Media .....................................................................................................................15

2. Jagran Prakashan...........................................................................................................15

3. Deccan Chronicle Holdings Ltd ....................................................................................16

4. Zee Entertainment Enterprises .....................................................................................16

5. Sun TV Network ...........................................................................................................17

6. TV Today Network .......................................................................................................17

7. New Delhi Television Ltd .............................................................................................18

8. Sahara One Media & Entertainment Ltd ......................................................................18

9. Balaji Telefilms Ltd .......................................................................................................19

10. Inox Leisure Ltd.............................................................................................................19

11. PVR Ltd.......................................................................................................................20

SOURCES & METHODS FOR COMPANY PROJECTIONS...............................................21

CONTENTS





EXECUTIVE SUMMARY

The media and entertainment industry captures a wide variety of companies that serve to provideproducts and services that keep the everyday consumer engaged. The Indian entertainment industry is

growing at a phenomenal pace. The growing corporatisation of the Mumbai film industry, the financialmuscle of the entertainment TV business and ambitious plans by the major players are all symptomatic ofthis changing reality. With A.R. Rahman and Resul Pokutty having won Oscars for their commendable

work in Slum dog Millionaire , the spotlight has shifted to India for its immense talent and potential. According to the study by ASSOCHAM and PWC, the current size of the domestic media andentertainment industry is estimated at Rs600 billion.

In the OND09, the print media sector is expected to benefit from the improving ad spends by theconsumer sector. The maximum benefit of lower newsprint cost would accrue in OND09. Cheer hasreturned to the multiplex industry with the fabulous run of Aamir Khan’s 3 Idiots . The industry is back onits feet with the good content releases. For the multiplex players the quarter OND09 is expected to seetop line growth of 30-40% and earnings are likely to double. Television media is expected to see

substantial portions of advertising spend to flow to Hindi GECs. It is expected to show positive growthafter three quarters. Low production cost and cost rationalization moves are projected to move themargins of the companies. Both Zee and Sun are expected to report strong numbers during the quarter.

As per Cygnus estimates, the sector is expected to see revenue growth of 4%. The aggregate sales of theindustry are expected at Rs17648.25m against Rs16972.69m. Operating profit is estimated to boost up inOND09 as compared to OND08 marked by the lower input cost and control over the operatingexpenses by the players of the industry. Operating profit is expected to hike by 40% at Rs5681.06m.Profit after tax is expected to increase by 43% at Rs2849.97m in OND09, against OND08.

In print media segment, Cygnus estimated that HT media would be the market leader in terms of revenueearned on the back of sharp growth in circulations revenue, expanding its presence and streamlining its

operations. The company is expected to register net sales of Rs3289.80m against Rs3371.10 in the samequarter previous year. In terms of growth, Jagran Prakashan, a leader in the north India is expected topost highest growth of 10% at Rs2277.10m as compared to OND08. During the quarter OND08,Deccan Chronicle’s operating performance is expected to reach at an OPM of 52.03% against 25.34% inOND08 and consequently the NPM is expected at 28.06% against 11.96%.

In television media, Sun TV will continue to perform well both in terms of revenue as well as growth. It isexpected to register a growth of 45.88% at Rs3950.80m. Sun TV is expected to see OPM and NPM of79.11% and 38.46% against 74.31% and 41.44% respectively when compared to the same period previousyear.

In Cine world, Inox Leisure is expected to excel in terms of both revenue and growth. It is expected to

register sales of Rs838.90m at a growth of 28.12% over the same period last year. Inox leisure is expectedto register OPM of 23.01% and NPM of 9.56% against 16.14% and 6.09% respectively in OND08.

According to the Ministry of Information and Broadcasting, the Indian media and entertainment industryis growing at a pace of 19% per annum. It is poised to reach Rs1157 billion by 2012, driven by theincreased advertising spend. Television viewership is also expected to increase from 115 million viewersto 132 million. With rising consumer spends, advertising revenues for broadcasters has also seen a surgeover the last few years. This along with relaxation of the FDI norms has resulted in a spurt of TVchannels, including niche channels. Technologies such as Direct to Home (DTH) and IPTV have alsocontributed to the sector's growth.





Net Sales and Growth

16

17

18

OND 08 OND09(E)

R s b n

0

2

4

6

%

Net Sales (LHS)

Growth (RHS)

EBIDTA and OPM

3500

4500

5500

OND 08 OND09(E)

R s m

20

24

28

32

36

%

EBIDTA (LHS)OPM (RHS)

Net Profit and NPM

1800

2300

2800

3300

OND 08 OND09(E)

R s m

10

12

14

16

18

%

Net Profit (LHS)

NPM (RHS)

Source: BSE India; Cygnus Research

INDUSTRY ANALYSIS

Media and Entertainment Industry The media and entertainment industry captures a wide varietyof companies that serve to provide products and services thatkeep the everyday consumer engaged. There are a number ofsegments within the industry, each of which provides adifferent form of entertainment to consumers around the

world. These segments include traditional print media,television, radio broadcasting, film entertainment, videogames, advertising and perhaps most importantly, themanufacturers of the technology that the above segments relyon.

The Indian entertainment industry is growing at aphenomenal pace. The growing corporatisation of theMumbai film industry, the financial muscle of theentertainment TV business and ambitious plans by the majorplayers are all symptomatic of this changing reality. With A.R.Rahman and Resul Pokutty having won Oscars for their commendable work in Slum dog Millionaire , thespotlight has shifted to India for its immense talent and potential.

According to the study by ASSOCHAM and PWC, the current size of the domestic media andentertainment industry is estimated at Rs600billion. According to the Ministry of Informationand Broadcasting the Indian media andentertainment industry is growing at a pace of19% per annum. It is poised to reach Rs1157billion by 2012, driven by the increasedadvertising spend.

Note: For the calculation of industry aggregate,the major companies taken into consideration are:

Jagran Prakashan, Deccan Chronicles, HT Media, InoxLeisure, PVR Ltd, Balaji Telefilms, NDTV, SaharaOne, Sun TV, TV Today and ZEE Entertainment OVERALL PERFORMANCE OF THE

Industry Aggregate (Rs in m)

OND 09 (E)

Net Sales 17648.25 Change (%) 4%EBITDA 5681.06

Change (%) 40%

Depreciation 1533.69Interest 343.52Other Income 705.27

PBT 4509.12

Tax 1659.16Effective tax rate 37%Reported PAT 2849.97

Change % (Reported PAT) 43%Market Capitalisation 394172.01Source: Cygnus Research





INDUSTRY IN OND09

Revenues are expected to grow As per Cygnus estimates, the sector is expected to see revenue growth 4%. The aggregate sales of the

industry are expected at Rs17648.25m against Rs16972.69m. All segments are expected to be back inblack with increase in circulation revenue in print media, subscription revenue in television segment andoccupancy rate in the cine segment. Operating profit is estimated to boost up in OND09 as compared toOND08 marked by the lower input cost and control over the operating expenses by the players of theindustry. Operating profit is expected to hike by 40% at Rs5681.06m. Profit after tax is expected toincrease by 43% at Rs2849.97m in OND09, against OND08.OPM of the industry is expected to increaseby 820.28 basis points at 32.2% in OND09. NPM of the industry is expected to increase by 441.02 basispoints at 16.1% in OND09, as compared to the same period of previous year.

Cost structure as percentage of sales (OND08 Vs OND09) As per Cygnus estimates, lower input and production cost, decline in interest burden and initiative takenby the industry players to rationalise the cost

will drag down the overall cost structure ofthe industry . It is estimated to decline by504.69 basis points at 87.85% of net sales. Raw material cost forms the major driver ofprint media segment, while production andtelecast fees are the major driver for

Television and Cine world. Raw material costas percentage of net sales is expected todecline by 508.73 basis points. Operationalcost as percentage of net sales is estimated todecrease by 316.70 basis points. Otherexpenses are expected to decline marginally

by 16.57 basis points. Interest & Financialcharges as percentage of net sales are expected to down by 173.94 basis points. Hiring of qualifiedmanagement staff is expected to increase the staff cost by 58.35 basis points as percentage of net sales .

Tax as percentage of net sales is expected to increase by 239.75 basis points in OND09, when comparedto the same period of previous year.

SEGMENTAL PERFORMANCE

Print Media According to study by ASSCOHAM and PWC, the print media is expected to grow by 5.6% by 2013 totouch Rs213 billion from the current level of Rs165 billion. Magazine publishing is expected to grow at arate of 6.5% against the newspaper publishing which is expected to grow at 5.6% for the next 5 years.

In 2008, the newsprint costs which represent the single expense for publishing house accounting for 55-65% of total cost had soared to over US$900. This has now come down to a more manageable US$600boosting the margins of all print media companies. The companies has been able to thrive in 2009 due tolower input costs, enhanced advertisements during the general elections and revival in spending fromtelecom, insurance, banking and FMCG companies.

With the rural markets being the target of a whole host of such companies, newspapers that have a strongregional reach are bound to garner a good share of the advertising revenues. It is expected that therevenues will be driven by regional advertising market and contributions from new media initiatives bykey newspaper publishers in their core market. This trend is more vigorous by the fact that even HTmedia, has looked to expand in the Hindi language genre under the Hindustan brand. Jagran Prakashan,the top circulated and read newspaper in the northern states, is on the expansion spree to further

penetrate in this market.

Cost structure as % of sales

OND09(E) OND08(A)

Raw materials 21.70 13.34Staff cost 11.26 11.04

Telecast Fees 4.86 4.39Operational Expenses 13.62 9.79Other expenditure 24.61 22.31Depreciation 6.19 8.10Interest 3.69 1.82

Tax 7.00 10.38Overall cost structure 21.70 13.34Source: BSE India; Cygnus Research





Standard Newsprint Prices in US

480

505

530

555

580

1 7 - N o v

2 4 - N o v

1 - D e c

8 - D e c

1 5 - D e c

2 2 - D e c

2 9 - D e c

5 - J a n

1 2 - J a n

1 9 - J a n

U S

$

30lb.

27lb.

Source: FOEX PIX; Cygnus Research

In the OND09 quarter, the print mediasector is expected to benefit from theimproving ad spends by the Consumersector. The maximum benefit of lower

newsprint cost would accrue in OND09.However, newsprint prices which hadcorrected majorly through 2009, has startedinching up again after bottoming out atabout US$460 in August-September. Theprice during OND09 quarter was US$550and industry sources say it is expected togo up to US$575-600 for the January-March quarter. It is expected to threatenthe sustainability of the margins for thesector from JFM10 onwards.

Film industry According to study by ASSCOHAM and PWC, the film industry is expected to grow at about 12% overthe next four years and would touch Rs185 billion from the present Rs115 billion. The industry grew in2008 by 13.4% to reach total revenues of Rs109.3 billion. Three Oscars, collaborations with Hollywoodstudios, a doctorate for Shah Rukh Khan and many more, the Indian entertainment industry made itsmark on the global arena in 2009. During the quarter OND09, the sector saw several successful releasessuch as Rocket Singh , 3 Idiots , Kurbaan etc. In the new year, Bollywood is hoping to hit the bull’s eye on theglobal front with two much talk about film-“Kites ” and “ My Name is Khan ”. There are big budgeted filmsin the line up and the industry has high hopes on these movies to make the cash registers at the box officeringing.

Multiplex industry

The multiplex industry is expected to grow at 20% in 2009-10 because of a steady stream of content. Atpresent, there are about 250 multiplexes in India and close to 900 screens. The industry is expected to seean addition of 40-50 new properties and 150-200 new screens in 2010 due to the fading recession, pointout multiplex chains. The industry is likely to invest Rs4 billion in setting up new properties and newgenre movies (3D being one).

SHOWBIZ

Multiplex To open in 2010 (E) Investment in 2010(E) Present count

Inox Leisure 15 multiplexes, 70 screens Rs20-25m per screen29 multiplexes and 105screens

Fame Cinemas 5-6 properties, 24-30 screens Rs15-25m per screen 23 multiplexes and 93screens

Cinemax 13 screens, 4 properties Rs20m per screen88 screens and 28properties

Fun Multiplex 12 new properties, 55 screens Rs800m 24 properties, 75 screens

PVR60-70 screens, around 10properties

Over Rs1 billion 200 screens, 45 properties

Source: Market Sources; Cygnus Research





As the multiplex business gains momentum in metros, operators are also extending their network into thenon-metros. Almost all the major players are back with their expansion plans, looking at smaller townsand cities for growth. PVR Cinemas, with 108 screens across 26 multiplexes, plans to add 32 screens byMarch next year. INOX Leisure has 105 screens in 29 multiplexes today, and expects to add 165 screens

by December 2011.

The year 2009 was a different story. Over 100 films were released in the year, but hits were few and farbetween. The two-month-long stand-off between producers-distributors and multiplex owners overrevenue sharing, which was resolved on June 5, led to a whopping Rs3 billion to the Hindi film industryalone.

Cheer has returned to the multiplex industry with the fabulous run of Aamir Khan’s 3 Idiots and themoolah to the multiplex industry. The industry is back on its feet with the good content releases. For themultiplex players the quarter OND09 is expected to see top line growth of 30-40% and earnings are likelyto double. Multiplexes are back in business, occupancies are rising and promoters are planning growthagain. A slew of movie releases over the next 4-5 months is expected to recharge multiplexes. Operators

are optimistic about content coming in from large production houses.

Television Media According to study by PWC, the television industry is expected to be the major contributor to overallindustry revenue pie. It is projected to grow at a stable rate of about 15% cumulatively over the next fiveyears. The overall industry will reach Rs420 billion by 2013 from an estimated Rs250 billion industry in2008. Also, the TV advertising industry is projected to witness an increase in its share to the total adindustry pie. The TV industry is estimated to command a share of 41% in 2013 from present share of39%.

In this segment, General Entertainment Channel (GECs) are gaining grip which is evident from themarked rise in their overall GRPs from the middle of 2009. Prime time GRPs of GECs have increased to

about 750-800 currently form about 675-700. Bigger players in the GEC got bigger in terms of viewershipand advertising. As per the data from TAM Media Research, Zee TV, Star Plus and Colors were the onesto garner top television viewer ship. Colors has garnered top viewership, while Zee TV has consistentlybeen among the top two-three channels in the Hindi general entertainment space, the biggest and mostlucrative genre. This space is characterised by concentration among the top three as the gulf in viewershipbetween them and channels such as Sony Entertainment and NDTV Imagine, is quite wide.

During the quarter OND09, it is expected see substantial portions of advertising spend to flow to HindiGECs. It is expected to show positive growth after three quarters. Low production cost and costrationalisation moves are expected to move the margins of the companies. It is expected that both Zeeand Sun to report strong number during the quarter.

DTH market The direct-to-home (DTH) TV sector in India continues to expand rapidly, attracting large investmentsfrom new and existing players over the past few months and is showing no signs of slowing down. Giventhe superior quality of DTH services in terms of viewing and interactivity, the number of DTHsubscribers has been soaring. The DTH market has been able to acquire around 18 Million subscribersover the past six years. With the entry of new players, the number of DTH subscribers has witnessed asteady growth as the competition in the market increased and people have a wide range of options tochoose from according to their requirements.

According to RNCOS, the number of DTH subscribers is expected to grow at a CAGR of around 28%during 2010-2012. Presently, the DTH subscribers constitute only a small proportion of the total TVhousehold in the country, representing a vast future growth potential. Increase in subscription revenue

will add to the revenues of the players like Zee which owns DTH and Sun TV owner of Sun Direct.





Emerging segments The key growth driver for the music industry over the next five years will be digital music, and its share isexpected to move from 16% in 2008 to 60% in 2013. Within digital music, mobile music will continue toincrease its share and maintain its dominance. Consumer demand, technology and music companies

acceptance to digitization will decide it pace of growth.

The year 2009 witnessed a deluge of digital platforms for music. Handset major Nokia launched its musicstore in India, print major Deccan chronicle planned the launch of its music portal On the online front,In.com concentrated on promoting music, and digital giant Hungama announced the launch of twoportals- Hungama.com and Artistaloud, while the Bennet, Coleman promoted Indiatimes too introducedmusic elements to its portal.

Radio sector According to study by ASSCOHAM and PWC, the Indian radio advertising industry is expected to growat a CAGR of 18% over 2009-13, reaching Rs19 billion in 2013 from the present level of Rs10 billion.Radio advertising industry will be able to increase its ad share from 3.8% to 5.2% in the next five year.

Online advertisingIt is projected to grow by 32% over the next five years and reach an estimated Rs20 billion in 2013 fromthe present Rs5 billion in 2008. The share of the online advertising too is projected to grow from 2.3% in2008 to 5.5% in 2013 of the overall advertising pie.

Out of home The size of OOH advertising spend is estimated to reach at Rs30 billion by 2013 and witness marginaldecrease in total ad pie at 6.8% in 2013.

Animation, gaming and VFX According to NASSCOM, the animation industry is expected to grow to US$1billion by 2012 from an

estimated US$494m in 2008. As of today, several animation films are in the pipeline for release next year. Visual effects are an emerging market. Round about 8-12% of a movie’s budget is spent on vfx. Thegaming industry in India would grow at a CAGR of 49% to reach US$830m.

INDUSTRY UPDATED DURING THE QUARTER OND09

HT Media hives off Hindi businessesHT Media has de-merged of its Hindi media business to its unlisted unit Hindustan Media Ventures. It isspinning off the Hindi-language Hindustan newspaper, Hindi magazines Nandan and Kadambini andtheir respective Internet portals.

Sathyam Cinemas to add 5000 seats

Chennai-based Sathyam Cinemas is planning to add 5,000 seats over the next 12 months with aninvestment of Rs400-500m. The theatre chain currently has 2,350 seats. As part of the expansion, thecompany would look at Tier II cities.

PVR acquires DLF's DT Cinemas for Rs600mIn a cash-cum-equity swap transaction, Multiplex chain PVR has acquired real estate company DLF’scinema business, DT Cinemas for Rs600m.

9.9 Media Launches Higher Education magazine9.9 Media, the New Delhi based media house has announced the launch of EDU– a monthly magazinetargeted at leaders in India’s higher education sector. The 60-page-magazine has a cover price of Rs150and will be circulated to 5000 leaders in higher education.





UTV signs TV syndication deals worth Rs950mUTV Motion Pictures has signed a series of non-exclusive television rights syndication deals with severaltelevision channels worth Rs950m. The deals are across their slate of 2008 and 2009 productions from'Oye Lucky! Lucky Oye!' and 'Dev D' to recent movies like 'Kaminey', 'Wake Up Sid' and 'Kurbaan'.

Reliance MediaWorks teams up with In-Three for 3D filmsReliance MediaWorks Ltd has joined hands with US-based company In-Three to establish a facility toconvert 2D films and videos into 3D. The strategic alliance is being established to cater to the growingdemand by Hollywood studios and other global content creators for converting new films as well as oldtitles shot in 2D to be released in theatres and on home platforms in stereoscopic 3D.

BIG Cinemas to add 100 more screens for worldwide exhibitionBIG Cinemas has plans to add 100 screens over the next year to expand its film exhibition businessglobally. The company currently has 500 screens across India, Malaysia, the US and Netherlands.

Zee Ent to merge ETC Networks with itself

Zee Entertainment Enterprises said its board of directors had given in-principle nod to merge subsidiaryETC Networks with itself. After the merger, the company would demerge its education business into aseparate entity.

FAME plans to open more cinemasFAME Cinemas plans to invest around Rs600m every year to open six multiplex. Each multiplex, witharound 4-5 screens, will be equipped with 1200 seats.

Yash Raj Films to produce exclusive content for Sony TVSony Entertainment Television, now Multi Screen Media Private Limited, India’s leading televisionbroadcaster has entered into an exclusive agreement with Yash Raj Films (YRF), India’s premier studio.

YRF will produce exclusive fiction and non-fiction content for the channel.

GOVERNMENT INITIATIVES The Government has initiated major reform measures, which have had a cascading effect on the growthof the industry. Permitting 100% foreign direct investment (FDI) through the automatic route for film industry and

advertising. Allowing 49% foreign holding in cable TV and DTH. Allowing 100% FDI in non-news publications and 26% FDI in news publications. The government has allowed 100% FDI in fax editions of magazines and newspapers. Recently, the government has allowed companies with core business in news segment but hived off

non-news business, to raise funds from overseas beyond the stipulated FDI limit of 26%. Suchcompanies can raise and route funds from overseas through its non-news arm, which will not be

calculated as foreign investment. The FM radio sector was opened for FDI with a 20% cap. Permitting setting up of uplinking hubs for satellite uplinking by private TV broadcasters from Indian

soil. Giving industry status to the films segment. Opening FM Radio operations to the private sector. The government has allotted US$50.13m in the current Five-Year-Plan for various development

projects of the film industry. The funds will be utilised to set up a centre for excellence in animation,gaming and visual effects among others.

The government has approved the policy for Head-end-in-the-Sky (HITS) operators, a technologythat will provide digitised cable content to viewers across the country.





INTER-FIRM COMPARISON

PRINT MEDIA

Operational performanceHT media to be the leader in terms ofnet sales

The print media segment was expectedto be benefited from the improving adspends by the Consumer sector. In spiteof the decline in the growth, HT media

was expected to be the market leader interms of revenue earned on the back of sharp growth in circulations revenue, expanding its presence andstreamlining its operations. The company was expected to register net sales of Rs3289.80m againstRs3371.10 in the same quarter previous year.

In terms of growth, Jagran Prakashan a leader in the north of India was expected to post highest growthof 10% at Rs2277.10m as compared to OND08. The company had increased the circulations sales priceand its revenues were expected to be driven by the advertising in both ways by space and as well as colouradvertising. Deccan chronicle holding limited was expected to see growth of 5% at Rs2254.35m as againstthe same quarter previous year.

Financial PerformanceMargins to improve

Increase in circulation, lower input costs and cost rationalisation initiative taken by the players in the printmedia segment is expected to drive the profitability. Net profits are expected to get boost from thedecline in interest rates over the last one year.

During the quarter OND08, Deccan Chronicle’s operating performance was expected to reach at anOPM of 52.03% against 25.34% in OND08 and consequently the NPM is expected at 28.06% against11.96% in the same quarter previous year. Jagran Prakashan was expected to see OPM of 28.03% andNPM of 15.68% against 14.52% and 7.46% respectively compared to OND08. HT media was expectedto have OPM and NPM of 15.38% and 5.60% against 9.76% and 2.32% respectively when compared tosame period previous year.

Print Media-Net Sales

OND08(A) OND09(E) Growth %Deccan Chronicle 2147.00 2254.35 5.00HT Media 3371.10 3289.80 -2.41

Jagran Prakashan 2070.09 2277.10 10.00Source: BSE India; Cygnus Research

Deccan Chronicle HT Media Jagran Prakashan

OND08(A) OND09(E) OND08(A) OND09(E) OND08(A) OND09(E)Net sales 2147.00 2254.35 3371.10 3289.80 2070.09 2277.10NPM 11.96 28.06 2.32 5.60 7.46 15.68OPM 25.34 52.03 9.76 15.38 14.52 28.02Source: BSE India; Cygnus Research





TELEVISION MEDIA

GECs to perform wellOperational Performance

The segment was expected to show apositive growth after three quarters.Substantial increase in advertising revenue

was expected to flow to Hindi GECs.Revival in subscription revenues would havehelped both Zee and Sun TV to reportstrong number during the quarter OND09.

During the quarter OND09, Sun TV wouldhave continued to perform well both interms of revenue as well as growth. It was expected to register a growth of 45.88% at Rs3950.80m. Zee

was expected to earn revenue of Rs3237.60m at a growth of 13.29% against the same period previous

year. Owing to low visibility of its programming slate and dipping realisations, Balaji telefilms wasexpected to see decline in revenues by 22.91% at Rs390.25m.

Financial Performance

Balaji Telefilms NDTV Sun TV

OND08(A) OND09(E) OND08(A) OND09(E) OND08(A) OND09(E)Net sales 506.25 390.25 818.40 849.80 2708.30 3950.80NPM 1.12 0.30 -21.36 -1.95 41.44 38.46OPM 4.78 -3.75 -8.19 10.90 74.31 79.11Source: BSE India; Cygnus Research

TV Today Zee Telefilms SaharaOND08(A) OND09(E) OND08(A) OND09(E) OND08(A) OND09(E)

Net sales 652.66 580.25 2857.80 3237.60 420.29 495.94NPM 13.29 11.83 17.72 45.68 -30.95 0.86OPM 21.19 13.88 25.54 49.44 -45.20 -7.50Source: BSE India; Cygnus Research

Control on operating expenses and lowering of interest rates would have helped improving the marginsof GECs Sun TV and Zee. Both the companies were expected to see considerable increase in theiroperating performance. Sun TV was expected to see OPM and NPM of 79.11% and 38.46% against74.31% and 41.44% respectively when compared to same period previous year. Zee was expected to havean OPM and NPM of 49.44% and 45.68% against 25.54% and 17.72% respectively in OND08.

Reduction in outstanding borrowing and cut down on interest burden would have helped to improve themargins of NDTV. It was expected to see OPM at 10.90% against 8.19% and NPM of 1.95% against21.36% in OND08.

Television Media-Net SalesOND08(A) OND09(E) Growth%

Balaji Telefilms 506.25 390.25 -22.91NDTV 818.40 849.80 3.84Sun TV 2708.30 3950.80 45.88

TV Today 652.66 580.25 -11.09Zee 2857.80 3237.60 13.29Sahara 420.29 495.94 18.00Source: BSE India; Cygnus Research





Lower input and production cost, decline in interest burden was expected to effect the overall coststructure of the television segment. Zee TV was expected to see highest decline in the cost structure aspercentage of net sales followed by Sahara One Media and Entertainment and NDTV. TV today hadspent nearly 100% of its net sales and its cost structure was expected to increase marginally with theincrease in staff cost and other expenses. Cost structure as percentage of net sales of Sun TV network wasexpected to remain flat during OND09 as compared to same period previous year.

In the Cinema world, the cost structure as percentage of net sales was expected to decline as compared toODN08. The cost structure as percentage of net sales for Inox leisure was expected to decline by 295.13basis points at 90.99% when compared to OND08. PVR Ltd would have seen a decline of 124.3 basispoints in cost structure as a percentage of net sales as compared to same period previous year.

Television Segment

NDTV Sun TV TV Today IndustryOND08 OND09 OND08 OND09 OND08 OND09 OND08 OND09

Raw materials - - - - - - 21.70 16.61Staff cost 33.42 27.01 9.47 9.20 28.61 36.63 11.26 11.85

Telecast fees - - 0.00 6.35 11.66 11.25 4.86 4.90Op. expenses 22.75 12.77 - - - - 13.62 10.45O. expenditure 52.02 49.33 16.22 5.34 38.61 38.29 24.61 24.44Depreciation 7.56 7.60 16.45 22.41 10.01 7.46 6.19 8.69Interest 5.41 5.88 0.30 0.04 0.04 0.05 3.69 1.95

TAX 1.11 0.00 21.45 20.31 8.58 6.37 7.00 9.40Source: BSE India; Cygnus Research

Television Segment

ZEE Sahara Balaji Telefilms Industry

OND08 OND09 OND08 OND09 OND08 OND09 OND08 OND09Raw materials - - - - - - 21.70 16.61Staff cost 2.96 4.75 8.42 5.50 6.37 8.65 11.26 11.85

Telecast fees - - - - 61.54 72.28 4.86 4.90Op. expenses 47.73 29.18 115.88 99.25 - - 13.62 10.45O. expenditure 23.78 16.64 19.43 15.12 29.54 26.41 24.61 24.44Depreciation 1.33 0.76 0.22 0.14 8.18 7.42 6.19 8.69Interest 7.20 0.90 2.78 6.91 0.00 0.00 3.69 1.95

TAX 8.75 10.66 -13.27 0.37 3.99 0.13 7.00 9.40Source: BSE India; Cygnus Research

Cinema World

PVR Inox leisure IndustryOND08 OND09 OND08 OND09 OND08 OND09

Raw materials 6.66 7.50 - - 21.70 16.61Staff cost 11.46 11.00 6.77 4.60 11.26 11.85

Telecast fees 26.04 0.00 36.30 28.01 4.86 4.90Op. expenses - - - - 13.62 10.45O. expenditure 37.02 63.25 40.79 44.38 24.61 24.44Depreciation 6.41 6.57 5.22 4.59 6.19 8.69Interest 4.15 2.75 2.06 1.46 3.69 1.95

TAX 3.12 3.19 2.79 7.95 7.00 9.40Source: BSE India; Cygnus Research





3. Deccan Chronicle Holdings Ltd

4. Zee Entertainment Enterprises

(Rs in m) Quarter Full Year Ended

ItemOND08

(A)OND09

(E) JFM10

(P)

GrowthRate % Y o Y

March08(A)

March09(A)

GrowthRate %

Net Sales 2147.00 2254.35 2001.00 5% 7823.7 8149.3 4%EBITDA 544.00 1173.01 1053.52 116% 4859.5 2682.4 -45%Depreciation 78.20 104.56 108.92 34% 279.9 320.6 15%Interest 190.60 120.26 114.65 -37% 767.9 709.3 -8%Other Income 135.80 72.25 70.86 -47% 378.8 426.8 13%PBT 411.00 1020.44 900.81 148% 4190.5 2079.3 -50%

TAX 154.30 387.77 315.29 151% 1471.1 678.6 -54%PAT 256.70 632.67 585.53 146% 2719.4 1400.7 -48%OPM 25% 52% 53% 62% 33%

NPM 11% 27% 28% 33% 16% Tax Rate 38% 38% 35% 35% 33%

Source: Cygnus Research

Note: A: Actual; E: Estimated; P: Projected


Item

OND08

(A)

OND09

(A)

JFM10

(P)

GrowthRate %

Y o Y

March08

(A)

March09

(A)

Growth

Rate %Net Sales 2857.80 3237.60 3302.35 13% 10419.9 12102.4 16%EBITDA 729.80 1600.60 1632.61 119% 4059.9 3634.7 -10%Depreciation 37.90 24.50 22.36 -35% 106 119.2 12%Interest 205.90 29.00 33.26 -86% 429.8 778.7 81%Other Income 270.30 277.00 300.12 2% 1019.3 1050.9 3%PBT 756.30 1824.10 1877.11 141% 4543.4 3787.7 -17%

TAX 250.00 345.10 375.42 38% 1592.2 690.3 -57%PAT 506.30 1479.00 1501.69 192% 2951.2 3097.4 5%OPM 26% 49% 49% 39% 30%NPM 16% 42% 42% 26% 24%

Tax Rate 33% 19% 20% 35% 18%

Source: Cygnus ResearchNote: A: Actual; E: Estimated; P: Projected





5. Sun TV Network

6. TV Today Network


ItemOND08

(A)OND09

(E) JFM10

(P)

GrowthRate % Y o Y

March08(A)

March09(A)

GrowthRate %

Net Sales 2708.30 3950.80 4069.32 46% 8610.6 10082 17%EBITDA 2012.60 3125.30 3219.06 55% 6218.8 7715.9 24%Depreciation 445.50 885.30 890.26 99% 1130.3 1849.2 64%Interest 8.20 1.60 1.40 -80% 55.6 38.9 -30%Other Income 144.40 83.50 98.76 -42% 649.3 833.2 28%PBT 1703.30 2321.90 2426.16 36% 5682.2 6661 17%

TAX 580.90 802.50 849.16 38% 2012.4 2289.9 14%PAT 1122.40 1519.40 1577.00 35% 3669.8 4371.1 19%OPM 74% 79% 79% 72% 77%

NPM 39% 38% 38% 40% 40% Tax Rate 34% 35% 35% 35% 34%




ItemOND08

(A)

OND09

(E)

JFM10

(P)

GrowthRate %

Y o Y

March08

(A)

March09

(A)

Growth

Rate %Net Sales 652.66 580.25 563.77 -11% 2310.5 2499.9 8%EBITDA 138.31 80.53 78.25 -42% 625.4 440.88 -30%Depreciation 65.36 43.26 45.65 -34% 160 194.21 21%Interest 0.29 0.28 0.30 -3% 0.9 1.37 52%Other Income 70.04 68.65 80.85 -2% 203.7 242.08 19%PBT 142.70 105.64 113.15 -26% 668.2 487.38 -27%

TAX 55.97 36.98 39.60 -34% 231.6 151.89 -34%PAT 86.73 68.67 73.55 -21% 436.6 335.49 -23%OPM 21% 14% 14% 27% 18%NPM 12% 11% 11% 17% 12%

Tax Rate 39% 35% 35% 35% 31%







7. New Delhi Television Ltd

8. Sahara One Media & Entertainment Ltd


ItemOND08

(A)OND09

(E) JFM10

(P)

GrowthRate % Y o Y

March08(A)

March09(A)

GrowthRate %

Net Sales 818.40 849.80 768.53 4% 3056.20 3096.10 1%EBITDA -67.00 92.60 83.74 - 205.40 -674.80 -429%Depreciation 61.90 64.60 63.50 4% 203.80 242.10 19%Interest 44.30 50.00 52.12 13% 38.50 146.50 281%Other Income 7.50 5.40 35.26 -28% 128.80 321.30 149%PBT -165.70 -16.60 3.38 -90% 91.90 -742.10 -908%

TAX 9.10 0.00 -0.17 - 49.10 -10.30 -121%PAT -174.80 -16.60 3.55 -91% 42.80 -731.80 -OPM -8% 11% 11% 7% -22%

NPM -21% -2% 0% 1% -21% Tax Rate -5% 0% -5% 53% 1%




ItemOND08

(A)

OND09

(E)

JFM10

(P)

GrowthRate %

Y o Y

March08

(A)

March09

(A)

Growth

Rate %Net Sales 420.29 495.94 413.08 18% 1972.54 2349.54 19%EBITDA -189.97 -37.20 -31.39 -80% -3.18 -2.63 -17%Depreciation 0.91 0.70 0.71 -23% 13.29 3.36 -75%Interest 11.70 34.25 38.16 193% 13.44 56.61 321%Other Income 16.73 78.25 75.63 368% 70.74 104.74 48%PBT -185.85 6.10 5.37 -103% 40.83 42.14 3%

TAX -55.77 1.83 1.61 -103% 12.6 22.2 76%PAT -130.08 4.27 3.76 -103% 28.23 19.94 -29%OPM -45% -8% -8% 0% 0%NPM -30% 1% 1% 1% 1%

Tax Rate 30% 30% 30% 31% 53%







9. Balaji Telefilms Ltd

10. Inox Leisure Ltd


ItemOND08

(A)OND09

(E) JFM10

(P)

GrowthRate % Y o Y

March08(A)

March09(A)

GrowthRate %

Net Sales 506.25 390.25 383.26 -23% 3289.69 2988.06 -9%EBITDA 24.20 -14.63 -14.37 - 1239.05 436.53 -65%Depreciation 41.43 28.95 30.25 -30% 127.01 235.23 85%Interest 0.00 0.00 0.00 - 0 0 -Other Income 43.12 45.25 28.26 5% 172.81 173.83 1%PBT 25.89 1.67 -16.36 - 1284.85 375.13 -71%

TAX 20.22 0.50 -4.09 - 410.99 108.45 -74%PAT 5.67 1.17 -12.27 - 873.86 266.68 -69%OPM 5% -4% -4% 38% 15%

NPM 1% 0% -3% 25% 8% Tax Rate 78% 30% 25% 32% 29%




ItemOND08

(A)

OND09

(E)

JFM10

(P)

GrowthRate %

Y o Y

March08

(A)

March09

(A)

Growth

Rate %Net Sales 654.80 838.90 864.07 28% 2062.4 2256.1 9%EBITDA 105.70 193.00 198.79 83% 401.7 347.5 -13%Depreciation 34.20 38.50 40.25 13% 93.1 126.5 36%Interest 13.50 12.22 10.01 -9% 59.9 44.7 -25%Other Income 0.20 4.60 6.50 - 115.9 22.7 -80%PBT 58.20 146.88 155.03 152% 364.6 199 -45%

TAX 18.30 66.66 62.01 264% 100.9 -44.4 -144%PAT 39.90 80.22 93.02 101% 263.7 243.4 -8%OPM 16% 23% 23% 19% 15%NPM 6% 10% 11% 12% 11%

Tax Rate 31% 45% 40% 28% -22%Source: Cygnus Research






11. PVR Ltd


ItemOND08

(A)OND09

(E) JFM10

(P)

GrowthRate % Y o Y

March08(A)

March09(A)

GrowthRate %

Net Sales 766.00 810.43 708.84 6% 2360.8 2747.3 16%EBITDA 144.10 147.90 124.47 3% 451.7 462.4 2%Depreciation 49.10 53.21 54.62 8% 151 189.4 25%Interest 31.80 22.25 26.25 -30% 68.2 114.3 68%Other Income 7.50 3.52 2.25 -53% 86.2 39.7 -54%PBT 70.70 75.96 45.85 7% 318.7 198.4 -38%

TAX 23.90 25.83 13.76 8% 108.1 71.9 -33%PAT 46.80 50.14 32.10 7% 210.6 126.5 -40%OPM 19% 18% 18% 19% 17%

NPM 6% 6% 5% 9% 5% Tax Rate 34% 34% 30% 34% 36%







SOURCES & METHODS FOR COMPANY PROJECTIONS

Sources Company annual reports

Press releases

BSE India

Research reports related to Economy, Industry and Company

Methods

Understanding companies’ product services

Understanding industry and economic indicators and general economic scenario

Understanding the dynamics between the companies and the industry in relation to demand and

supply, technology, regulation, inflation, etc

Understanding recent strategies and initiatives taken by companies such as product launches,

capacity additions and M&As

Making revenue projections based on the expected business strategies and financial analysis

Validating the financial projections of the company with the overall business strategy

Calculating the cost structure on the basis of sales and past and present trends in the industry

Analysing quarterly growth rates and growth rates of last 8 quarters

The cut-off date for OND quarter results is January 25 th

, 2010. Quarterly performanceanalysis of companies announcing their results after this date is based on Cygnus estimates.

Indian Media Industry -

Documents

Transcript of Indian Media Industry -