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Media sector stocks under pressure

13-November-2001
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Media sector stocks under pressure

According to equity analysts tracking the media sector, a decline in advertisement spends by the corporate sector is expected to keep topline as well as bottomline of media sector companies under pressure.

According to the equity analysts, quoted media companies have been able to survive the July-September 2001 quarter but may find the going tough in the next couple of quarters.

Zee Telefilms, among the leading media companies, is expected to show muted performance over the next two quarters as advertisement revenues are not likely to go up. However, subscription revenue might go up.

Zee Telefilms consolidated performance in the second quarter of 2001-2002 was considered better than expected. Its net profit of Rs 53.3 crore (Rs 54.34 crore) was against markets expectation of a large fall in profit.

While revenue from subscription rose by 52 per cent, advertising revenue dipped to Rs 137.11 crore from Rs 138.24 crore in the year-ago period.

Another positive factor aiding Zee is the possibility that the promoters may pay Rs 130 crore to the company. If this materialises, there will be a good flow of money into the company.

Balaji Telefilms continues to be the market favourite among media companies. The company, which recorded a net profit of Rs 6.62 crore for the quarter ended September 30, 2001 on revenues of Rs 23.62 crore, is expected to improve its performance.

Analysts expect a 15 per cent bottomline growth in the October-December quarter as compared to the July-September quarter, for Balaji Telefilms.

Balaji's profits were attributed to an increase in rates. Higher volume and rates are expected to push its profits further up.

In the first-half period, net profit jumped to Rs 11.56 crore from Rs 2.99 crore in the year-ago period. Net sales rose to Rs 47.28 crore (Rs 16.71 crore).

Analysts believe that Balaji has creative talent and production infrastructure, factors essential for financial performance.

According to an Arthur Andersen study, Indian entertainment industry requires higher level of corporatisation, financing channels, adequate infrastructure and higher professionalism for sustainable wins.

Although Mukta Arts had reported a 62 per cent rise in net profit at Rs 4.02 crore (Rs 2.47 crore) in the second quarter on net sales of Rs 12.30 crore (3.27 crore), analysts were of the opinion that the next two quarters are likely to be colourless.

Arthur Andersen estimates the film segment of the industry growing three-fold by 2005 from current levels. High entertainment taxes and issues of piracy are some of the stumbling blocks for this segment.

Television Eighteen India Ltd. (TV18) has improved its performance in the second quarter of 2001-2002 with a net profit of Rs 1.36 crore as compared to a net loss of Rs 6.52 crore in the year-ago period. This net profit is a shade higher than the Rs 1.12-crore reported in the April-June quarter.

However, its consolidated performance shows a net loss of Rs 1.48 crore in the second quarter.

As for Sri Adhikari Brothers Network Ltd., its dependence on Doordarshan for providing content and losses from its television channel SABe TV are dragging the company down.

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