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CAS effect: Cable Bill propel media shares

12-December-2002
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CAS effect: Cable Bill propel media shares

The passing of the Cable Television Networks (Regulation) Amendment Bill, 2002 in the Parliament propelled media stocks. But profit booking towards the end of the day pared some gains.

Broadcasting media counters such as Zee Telefilms ended the day up a marginal 0.29 per cent at Rs 102.75, TV18 was up 2.26 per cent to Rs 72.40. But Hinduja TMT ended the day at Rs 287.50, 1.98 per cent lower than Tuesday’s close and Jain Studio too was lower at end of the day’s trading, at Rs 24.30. Other shares such as Cinevista, ETC Networks, Padmalaya Telefilms, Mukta Arts, Adlabs and Balaji Telefilms rose in the range of 2-5 per cent.

On Tuesday, both houses of Parliament cleared the Cable Television Networks (Regulation) or the conditional access system (CAS) Bill, which enables consumers to choose the pay channels they wish to watch, and pay only for those - through a set-top box.

Media companies are now expected to gain as there would be total transparency between the broadcaster and the cable operators as to the number of customers with the operator.

According to an analyst with a foreign brokerage, “ We estimate a total of six million households with a TV cable connection in the cities of Mumbai, Kolkata, Delhi and Chennai. Assuming that all six million households make the transition to an analog set-top box, we estimate that total capital investment would be around Rs 1,200 crore to Rs 1400 crore.”

Industry experts however believe that only 50 per cent of the households will install a set-top box, which would entail an investment of Rs 600 crore.

Availability, of these boxes may not be a significant problem as analysts and experts alike feel that broadcasters and multi-system operators will ensure that these boxes are available at a reasonable price.

There are concerns however, even after the introduction of this bill and the concern is mainly at the broadcasters’ end.

The concern is that during the transition to the CAS there could be loss of subscriber households and the consequent impact on advertising revenue due to the reduction in reach.

However, broadcasters such as Zee believe that the transition is likely be phased and therefore may not have any materially negative impact either on the pay or advertising revenues for the broadcasters, said an industry source.

Companies such as Zee and Hinduja TMT will also benefit as they have a cable arm and it is the cable industry which is going to be most benefited due to the introduction of this bill.

Between November 10, and December 10, 2002, the market capitalisation of the media sector, comprising 37 companies, increased 13.57 per cent from Rs 7,089.97 crore to Rs 8,052.07 crore.

The rise in the sector was mainly due to Zee Telefilms’ surge, having added 17.35 per cent to Rs 4,226.06 crore to the total m-cap of the media sector stocks.

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