Media stocks, the only ones which were relatively unscathed by the meltdown in the information, communication, entertainment sector, are beginning to show signs of fatigue.
These stocks have fallen drastically in the last 50 days, largely on fears of lower earnings. All the media counters, top as well as second-line, have lost significantly between 11 per cent and 43 per cent between September 2 and October 28.
Media companies have lowered advertisement tariffs under competitive pressures. This has a negative impact on the revenues of television channels such as Zee Telefilms, Sri Adhikari Brothers and TV-18.
Also, there are signs of viewer fatigue for the usual television fare, which is increasingly translating into lower earning prospects for leading content producers such as Balaji Tele, Cinevista, Pritish Nandy Communications (PNC) and Padmalaya Tele.
Advertising spend and consumer spending have reduced. Television channels are facing a squeeze due to the reduced adspend. In the financial year 2000-01, adspend has declined substantially to single-digit levels from the high double-digit growth the sector witnessed in the mid-nineties. Adspend grew a mere 8.2 per cent in 2001-02 to Rs 8,510 crore, according to analysts at Kavy Stock Broking.
Among the frontline media stocks, Zee has been one of the biggest loser. The scrip has lost 28.45 per cent in the last 50 days, hitting a 52-week low in the process.
Reduced corporate ad budgets and the fact that companies are spreading the ads between channels are obviously the dominant theme, the markets are equally worried about company-specific factors.
Balaji Tele tumbled 15.46 per cent in the last 50 days to slip below Rs 90 (post stock-split) due to lower profit expectations in the future.
Analysts are of the view that the popularity of serials produced by the company has dropped significantly. Leading serials produced by Balaji include “Kahani Ghar Ghar Ki” and “Kyunki Saas Bhi Kabhi Bahu Thi”. Moreover, its recently launched serials have not been received well either.
Analysts also said that today the general entertainment channels are looking beyond just soaps. They are looking at other genres of programming. That is also one of the reason for Balaji’s future looking a little cloudy at the moment. PNC has shed 42.86 per cent after its much-touted film Sur, featuring Lucky Ali, bombed at the box office.
Despite its recent acquisition by Zee, ETC Networks has slipped 27.76 per cent due to lower advertisement revenues and its fall out on the bottomline. TV-18 has lost 22.25 per cent on concerns over lower profitability.
Subhash Ghai’s Mukta Arts has been another big loser, joining the ranks of Cinevista, Tips, Adlabs Films, and Sri Adhikari all of whom have also lost significantly due to lower earning expectations.