Exactly one year after the launch of its two news channels NDTV 24×7 and NDTV India, on April 14, 2003, Pronnoy Roy-promoted New Delhi Television has launched its Initial Public Offer in Mumbai on April 13, 2003.
The Rs 109-crore offer consists of two parts, namely fresh equity of shares and an offer for sale of shares of Rs 4 each in a price band of Rs 63-70 per share. Of the Rs 109 crore public issue, the net offer to Indian public is estimated to the tune of Rs 100 crore while the remaining Rs 9 crore is being reserved for NDTV employees.
ICICI Securities, Kotak Mahindra Capital and JM Morgan Stanley are the lead managers for the initial public offer.
As per the draft prospectus, NDTV's objective of the issue is to deploy the net proceeds from the fresh issue of shares to meet its working capital requirements, repayment of loans and general corporate purposes. Net proceeds from the sale of existing shares will be paid to selling shareholders. As a result of this issue, the company also expects to provide greater liquidity to its existing shareholders.
“As India enters into a growth phase, media in general and news broadcasting in particular would significantly benefit. We are planning an IPO at this stage since we have been long-term players in this business,” said Pronnoy Roy, Chairman and Whole-time Director. “We expect our viewers to be our shareholders so that everybody can grow with us,” he added.
The shareholders offering shares in the issue are GS Television Holdings, GS Media Holdings, GS Communication Holdings, Saffron Fund Inc, JF India Fund, JP Morgan Fleming India Investment Company, Mauritius, SBI Capital Markets A/c India Magnum Fund and NV Mutual Fund – all adding up to a total of 5,910,937 equity shares.
The current shareholding pattern of the company consists of 51.1 million equity shares of Rs 4 each aggregating to Rs 20.4 crore. The post-issue shareholding pattern of the company can be determined only after the book-building pattern. Post IPO, however it is understood that the FII’s stake in NDTV would come down to 2 per cent, which currently stands at 9.57 per cent. .
NDTV recorded total revenues and profits of Rs 103 crore and Rs 20.6 crore respectively in FY2003-04, based on consolidated financial statements as per GAAP. For the nine-month period ended December 2003, the group recorded revenues of Rs 45.9 crore and a loss of Rs 47.5 crore. The debt component is to the tune of Rs 38 crore.
The pricing, according to the lead managers, is keeping in view the market capitalisation of the media sector which on the whole works to approximately between Rs 375 crore to Rs 475 crore.
Media analysts, however, are keeping a close watch on the issue. According to them, 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 and also with the elections round the corner, it is an upside for the news media companies.
The news section contributes five per cent to the complete television viewership but shares only nine per cent of the total television advertising revenue. The total advertising revenues for the Indian television news segment were estimated at approximately Rs 350 crore in FY03 as compared to Rs 100 crore in FY99.
Increasing number of advertisers want to advertise on news channels due to the favourable demographics of the news viewers. It is seen that 54.7 per cent of news viewership comes from SEC A and SEC B class population which is the prime target audience for many advertisers. Going ahead, this equation is expected to get even more favorable as news channels become an important part of the media planners' budget.