Wind of optimism is blowing across the media sector. This is quite evident from the response that one gets from research analysts tracking this sector and also from a look at the media stocks on the bourses which over the last one month have been performing well.

On an average the leading media company stocks have seen a growth in the range of 3 per cent to 26 per cent in their stock prices over the last one month from March 22 to April 28, 2004. Zee Telefilms moved up 26 per cent during this period. Even ETC and Padmalaya Telefilms which are wholly owned subsidiaries of Zee TV have also performed well. Both these stocks saw growth of 15.4 per cent and 21 percent respectively. Balaji Telefilms saw a growth of 5.4 per cent in its stock price. TV Today and TV 18 moved up 8.4 per cent and 3.2 per cent respectively.

Media analysts tracking the sector say there are two or three reasons for the optimism within the media sector. One, the general sentiment in the markets is bullish which is reflecting on the media sector. Secondly, the media sector is entering a phase of regulatory environment which would bring in certain organisational structure within the industry and lastly, the players are moving out of a promoter centric business models with poor revenue visibility to a more integrated business model. Apart, from all these factors the buoyant economic growth is also adding to the positive sentiments.

"The Media sector is currently in the limelight. This is one sector that performs irrespective of what happens on the international front. Secondly, the booming Indian economy is likely to boost the advertising revenues for media companies which, currently is the biggest revenue source for the broadcasters," says Richard D'souza, Senior Analysts with Four Dimensions Securities.

The latest and one of the first reports on the media sector for the year which was released by Karvy Stock Broking says that the Indian media sector is at an inflection point. Most media companies have moved up from the start up to growth stage in their business models, as a result of which revenue predictability is no longer a big concern. Integrated and niche business players would be able to sustain double-digit Price Earning (PE) multiples over the next two to three years.

Amol Dhariya, analyst with Karvy Stock Broking says: "The Indian media space is being viewed in a different light now. The players are now being seen as being capable of 'monetising' gains from integrated business models". Further he adds that on the back of the buoyant economy, low equity risk premiums and emerging regulatory clarity certain investor concerns regards the media players have been addressed.

The positive sentiments for the media stocks is also been echoed in the primary markets. This is quite evident from the success of TV Today IPO which mopped up Rs 137 crore in December 2003 and same is being expected from the NDTV IPO.