Indian media firms have had one of the worst years at the stock markets in financial year 2018-19 (FY19), with the Nifty Media index recording a 25 per cent fall in value -- the worst since FY09 when the index recorded a nearly 60 per cent decline.
In fact, out of the 15 stocks covered on the index, 13 saw a significant fall in share values during the fiscal. The only two stocks on the index which have seen positive value growth are both multiplex majors: PVR Ltd and INOX Leisure which saw stock prices rise by 33.48 per cent and 21.76 per cent respectively.
Of the thirteen stocks that recorded declines, two -- Eros International Media and Zee Media Corporation -- have recorded an over 50 per cent fall in value over the year. Other stocks fell from between 19 per cent (Hathway Cable and Datacom) to 49 per cent (TV18 Broadcast Ltd (See graph).
Weighing heavily on the index in particular this year have been the troubles plaguing the Essel Group-owned Zee firms, two of which figure prominently on the index losers list. Zee’s many channels are some of the most watched in the Indian television market, with the group controlling around 20 per cent market share.
However, the last year has seen the group rocked by a series of crises culminating in the group’s shares tanking on the markets on January 25 following reports of a government probe. While share values have recovered slightly post announcements from the group’s founder Subhash Chandra that the group has entered into arrangements with its lenders to not sell any pledged shares until September 29, the recovery has been middling. The group has also been looking to sell stakes to overseas investors in order to raise funds.
Apart from the Zee fiasco, the media index took a hit due to slowdown in advertisement revenue growth, especially in the fourth quarter. According to an Elara Capital research note, media firms took a hit in advertisement due to the implementation of the new tariff order issued by TRAI, which led to large-scale disruption in the TV sector during the quarter.
“... ad spend was held back on implementation of TRAI tariff order which impacted viewership share of most channels; some product launches also were delayed due to this uncertainty,” the brokerage said.
Speaking about the prospects of Zee Entertainment and Sun Network, another media giant in the south Indian market, it pointed out that EBIDTA margins for both would likely be flat year-on-year since it expects “the negative impact of content investment on TV and digital will be offset by strong subscription revenue growth”.
The only bright spot for the sector during the year were multiplex operators. Elara says “PVR and Inox Leisure are likely to report BO revenue growth of 45 per cent YoY each” for the fourth quarter. But the acquisition of southern multiplex powerhouse SPI Cinemas by PVR will see it outperform, Elara noted, adding that “ex-SPI, we believe PVR will continue to underperform vs Inox on ad growth, given PVR’s premium pricing and peaked out inventory”.