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India Equity Institutional Research Media Initiating Coverage

TV18 Broadcast Ltd. INR 38

Short term blips, long term story intact BUY
TV18 is a part of the Network18 Group, one of Indias most diverse and leading
Media and Entertainment conglomerates with interest in television, internet, films Target Price : INR 73.8

and entertainment, e-commerce marketplace and properties, magazines, mobile Potential Upside: 94%
content, and allied businesses. Investment in digital business, pick up in advertising
revenue, turnaround in regional and new investments, renegotiation of broadcasting Market Data
deals with various MSOs and DTH providers in next 12 months and strong growth in Shares outs (Mn) 1714
regional performance are likely to be key drivers.
Equity Cap (INR Mn) 3428.7
Market Cap (INR Mn) 65060
Investment Rationale
52 Wk H/L (INR) 50/33
Strong Revenue growth visibility
Volume Avg (3m K) 6815
TV18 has created an ecosystem with investments in developing media properties in
Face Value (INR) 2
last few years. We believe profitable growth is visible for TV18 on both key drivers
Bloomberg Code TV18 IN
of revenues, viz; advertisement and subscription. We expect revenue, EBITDA and
*As on 9th Dec, 2016
APAT to grow at CAGR of 7%, 34% and 42% between FY16 and FY18E, respectively.
Market Info:

Advertisement revenues on the cusp early recovery: TV18 was under SENSEX 26515
tremendous pressure as advertising revenue had plummeted between 2010-2012 NIFTY 8171
due to the economic slowdown and ad cap regulation. Advertising budgets were cut *As on 12th Dec, 2016
by various companies across sectors driven by lack of clarity about market share
Price Performance
after reliability of TAM ratings was questioned. Advertising growth has been slow
between FY12-15 due to slow down in economy, delay in digitization, bad monsoon 140
(which has pushed rural spending to back burner) and ratings controversy. We
believe that realizations will improve in H2 FY17 and going forward, the volume
growth is likely to be tepid in the news business. We expect ad per minute
realizations to grow in range of 6- 8% (12-14% in General Entertainment Channel
space while likely to be ~-6% in news business) and expect pick up in advertising 100

revenue due to various factors like good monsoon, 7th Pay Commission, etc.



Subscription revenues to surge: Historically, advertising has been the primary
revenue generator for the company while subscription revenues have been
substantially lower as TV18 is a relatively new entrant, especially in GEC segment.
Sensex TV18
Under declaration by local cable operators, the company was registering lower
subscription revenues but with the advent of digitization across India, the situation
Share Holding pattern (%)
is likely to change going forward. We expect that with the advancement of
digitization in Tier III and Tier IV cities, subscription revenues will improve over next Particulars Sep16 Jun16 Mar16
few years. As of FY16, Zees subscription revenue stands at ~INR 20,578 vis--vis Promoters 60.4 60.4 60.4
TV18s subscription revenue of INR 3,769 Mn. Going ahead, we believe that the gap
FIIs 11.86 11.52 10.66
between subscription revenues of Zee & Colors to narrow down significantly.
DIIs 5.71 5.07 4.85

Strong positioning to grab regional opportunity: The company has marked its Others 22.04 23.01 24.08
entry in the fast growing regional space by acquiring a stake in ETV. The company Total 100 100 100
currently owns stake in regional genre with its JV - Viacom 18 - and 24% stake in
Source: BSE
ETV Telugu channel. We believe that this investment is likely to pay off over the
longer term as the company achieves breakeven in different segments and takes
advantage of cross selling of content. The company is also planning an additional Mayank Babla
investment in regional space whose benefits will be derived in the longer term. The Mayank.babla@krchoksey.com
company has recently launched second Kannada channel in GEC space post
91-22-6696 5429
leadership status in Kannada segment. The company is now planning to extend its
news channels to cater to regional areas. The company has been continuously
adding regional channels to its bouquet which will drive revenue growth by 7%
CAGR between FY16 and FY18E. The regional advertising rates are on rise because www.krchoksey.com
of Colors regional channels gaining market share in terms of viewership.
91-22-6696 5203
91-22-6691 9569

KRC Research is also available on Bloomberg KRCS<GO>, Thomson First Call, Reuters, Factset and Capital IQ December 12, 2016
TV18 Broadcast Ltd.
Colors strengthening position in broadcasting space will start paying off: The General Entertainment Category
(GEC) has undergone consolidation with STAR, ZEE and Colors exchanging top 3 places in the last few years. Currently,
Colors is the second largest channel in terms of viewership as per BARC ratings and has achieved the distinction of being
the leader in terms of viewership earlier. Colors has gained higher market share in urban area as per BARC ratings while
still increasing its presence in rural areas. Colors has been constantly in No. 2 since last few quarters and has higher
viewership than ZEE most of the previous financial year.

Key Financials

Particulars (INR mn) FY16 FY17E FY18E

Net Sales 10521.4 10351.1 12135.5

EBITDA 1056.1 1163.5 1859.7
PAT 2047 2607.2 4215.1
OPM (%) 10% 11% 15%

NPM (%) 19% 25% 35%

EPS 1.2 1.5 2.5

Source: Company Data, KRChoksey

Valuation & Recommendation

TV18 has demonstrated a successful business model over the years and across the segments; the company's channels are
among the top leaders in their particular segments. All the major channels, including GEC, news and business news
channels of the company have strong market share in their respective segments. We believe that with onset of digitization,
parent company foray into high end broadband, continued recovery in regional business and higher net distribution income,
the company will exhibit healthy growth going forward for the company, We believe that the upside potential in the stock is
significant, given the potential in regional foray and data demand which is likely to surge as 4g LTE made inroads in the
country as the company has already tied up with RJio for content monetization.

Going ahead, we feel that company may see benefits from business news and the same shall be visible in the 43% CAGR
profit growth between FY16 and FY18E of TV18 Broadcast, on the back of strong rating performance of the company in the
past few months. We are expecting investment in digital business, pick up in advertising revenue due to good monsoon,
turnaround in regional and new investments, renegotiation of broadcasting deals with various MSOs and DTH providers in
next 12 months and strong growth in regional performance are likely to be key driver for next months. We are maintaining
our advice to accumulate the stock. We have valued the stock at 30x its FY18E EPS of INR 2.46 and thus arrived at
price target of INR 73.8 for the stock.

About TV18 Broadcast Limited:

On the entertainment side, TV18 venture with Viacom Inc called Viacom18,which houses a portfolio of popular entertainment
channels such as Colors, Colors HD, Rishtey, MTV India, MTV Indies, Comedy Central, Vh1, Nickelodeon, Nick HD+, Sonic
Nickelodeon, Nick Jr./ Teen Nick & regional bouquet of channels. Viacom18 launched Colors Infinity in July 2015 and
redefined the English entertainment genre in India by introducing several distinctive features.

The Groups filmed entertainment business is operated through Viacom18 Motion Pictures, a division of Viacom18. TV18 has
also forayed into the Indian factual entertainment space through a joint venture with A+E Networks and operates History

In the regional space, TV18 operates a Gujarati business news channel CNBC Bajar, a Marathi general news channel in
partnership with the. Lokmat Group IBN-Lokmat, ten regional news channels under the ETV umbrella and five regional
entertainment channels under the Colors brand. TV18 also operates a 24-hour Indian news channel in English News18,
targeting global audiences who are interested in the country.

2 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
TV18 is a part of the Network18 Group, one of Indias most diverse and leading Media and
Entertainment conglomerates with interest in television, internet, films and entertainment, e-
commerce marketplace and properties, magazines, mobile content, and allied businesses. TV18
operates news channels such as CNBC-TV18, CNBC-Awaaz, CNBC-TV18 Prime HD, CNBC Bazaar, CNN-
News18 and IBN7.

On the entertainment side, TV18 venture with Viacom Inc called Viacom18,which houses a portfolio of
popular entertainment channels such as Colors, Colors HD, Rishtey, MTV India, MTV Indies, Comedy
Central, Vh1, Nickelodeon, Nick HD+, Sonic Nickelodeon, Nick Jr./ Teen Nick & regional bouquet of
channels. Viacom18 launched Colors Infinity in July 2015 and redefined the English entertainment genre
Business Model in India by introducing several distinctive features.

The Groups filmed entertainment business is operated through Viacom18 Motion Pictures, a division of
Viacom18. TV18 has also forayed into the Indian factual entertainment space through a joint venture
with A+E Networks and operates History TV18.

In the regional space, TV18 operates a Gujarati business news channel CNBC Bajar, a Marathi general
news channel in partnership with the Lokmat Group IBN-Lokmat, ten regional news channels under
the ETV umbrella and five regional entertainment channels under the Colors brand. TV18 also operates
a 24-hour Indian news channel in English News18, targeting global audiences who are interested in
the country.

(i) First Mover advantage in Business Channel space

(ii) Faster Turnaround time for regional channels
(iii) Diversified Bouquet of channels
(iv) Strong parentage of Reliance Industries
(v) Digital Presence through VOOT

As of Q2FY17, SOTL has a Net Debt of INR 10,240 Mn and Cash on hand of INR 560 Mn.
In Q4FY16, SOTL underwent a demerger of its Power business which led to significant improvement of
its financial parameters. Net Debt to Equity improved from 4.5x pre-demerger to 1.4x post-demerger.
Interest burden reduced from ~INR 3,270 Mn to ~INR 1,130 Mn. Profitability also improved ROCE
improving from ~5% during pre-demerger to ~18% post-demerger.
The company is expected to incur capex to the tune of INR 4,000 Mn over FY17E and FY18E purely
from internal accruals.

Indias communication landscape has evolved over the last 5 years, driven by the need to deliver low-
latency, highspeed broadband capable of empowering citizens with information and enable economic
growth. With the demand for smart phones on exponential rise, the need for related broadband
connectivity for services like video streaming, mobile payments, e-healthcare, e-education, e-
governance, surveillance, etc. has also increased. Additionally, as data consumption grew based on
high Smartphone demand, the need for 3G and 4G rollout became eminent. Domestically, factors such
Industry as a) 3G services expansion, b) Rollout of 4G services c) Increase in Non-Spectrum Capex d)
Revenue Government initiatives such as smart cities projects, Network for Spectrum and Digital India will be
Drivers major industry revenue drivers going ahead. Globally, capital expenditure on fibre infrastructure will
surpass USD 144.2 billion between 2014 and 2019. Additionally, copper networks are being replaced
by fibre. Reports indicate that worldwide 738 million premises currently own fixed broadband
connections, with FTTH based systems contributing to the/being the majority. While China took the
lead for the impact on the rise of FTTH in 2015, the Americas also saw increase in fibre-based
broadband connectivity. While these investments focus on expanding the existing networks, a large
share of fibre investments in emerging markets go to launching new LTE networks.

Provide end-to-end Network and Systems solutions for Telecommunications industry.

Capacity expansion to meet demand supply gap in the Optic Fiber space.
Backward integrated manufacturing set-up at Aurangabad to provide considerable cost advantage over
SOTL owns over 50 patents from its center of excellence in Aurangabad and has filed for 54 more
patents which can be profitably monetized.

3 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
Investment Rationale
Revenues growth to be driven by advertisement growth and improvement in Subscription revenues
Revenues at inflection point supported by higher net distribution income: Historically, advertising has been the
primary revenue generator for the company while the share of subscription revenues has been substantially lower than its
peers (Zee TV & Sun TV). Due to under-declaration by local cable operators (as company has been a late entrant in both
GEC space and regional segment), the company was registering lower subscription revenues. However, with the advent of
digitization across India, the situation has been changing slowly. The leakages were higher in rural and Tier - III areas as
there was hardly any market for niche presence like business news and infotainment space.

We believe, with complete digitization through advancement towards Phase III and Phase IV, subscription revenues will
surge over next few years. Although the advertisement revenue of TV18 is and Zee Entertainment Enterprises Limited is
comparable due to similar market share, TV18s subscription revenue is half of Zees subscription revenue. However, in the
general entertainment space, TV18 is a relatively new player (Colors was launched in 2008) vis--vis other players like
Star, Sony and Zee, which have presence since more than 20 years. Due to the relatively shorter presence, the initial focus
of management was to garner market share and hence TV18 had lack of stable collection system. Non-alignment among
various divisions of TV18 and dependency on external aggregator (prior to IndiaCast) was the key reason for an ~80%
difference in subscription revenues between Zee and TV18 in FY14 (and prior periods).

The acquisition of the ETV bouquet and new launches in infotainment space like HISTORY 18 and Comedy Central have
resulted in better bargaining power for TV18 and will drive subscription revenues going forward. The expenditure on TV is
considered a basic necessity and hence subscription revenues are largely stable as opposed to advertising revenues which
tend to fluctuate with economic conditions and consumer spending. We believe that net distribution income (subscription
income - carriage fees) has potential to grow from INR 1.4 Bn in FY14 to INR 6 Bn by FY20. Prior to digitization, a TV
network could carry only 80 100 channels and hence broadcasters had to pay high carriage fees to MSOs to ensure that
their channels were broadcast by MSOs. Newer and smaller players with less popular channels had to pay relatively higher
carriage fees to MSOs. Post-digitization, carriage fees have reduced by more than 40% as MSOs extend their channel
offering in order to acquire more customers. The government has also directed MSOs to telecast a minimum 500 channels
by the end of 2015.

We expect carriage fees to reduce at 25% CAGR for the next two years and this should result in a surge in net distribution
income. The recent TRAI directive to allow inflation linked hike of 27% in two phases will also benefit TV18 at the time of
renegotiating the contract with the MSOs. We also believe new guideline by COAI on carriage fees is also positive for
channels in the long term as it will limit carriage fees expenses for the channels.

Advertising has witnessed signs of early recovery: TV18 was under tremendous pressure as advertising revenue had
plummeted due to the economic slowdown and ad cap regulation. Advertising budgets were cut by various companies
across sectors driven by lack of clarity about market share after reliability of TAM ratings was questioned. Additionally,
delay in digitization, bad monsoons (which had pushed rural spending to back burner) and ratings controversy dragged ad
revenues. We believe that realizations will improve from H2FY17; however volume growth is likely to be tepid in the news
business. We expect realization of ad per minute to grow in range between 6- 8% (higher in GEC space while likely to be
negative in news business).

Going ahead, advertising revenue is expected to pick up due to various factors like good monsoon, 7 th Pay Commission and
so on. The news channel business is set to revive on account of higher ratings due to conversion into FTA, rebranding of
news channel early this year and crucial UP elections. During elections, news channel enjoy better advertisement sales from
various political parties and this has been witnessed in earlier elections also. As per market estimates, 2014 elections had
led to additional revenue of INR 35-40 Bn in terms of advertisement sales for media industry. The average realization for 10
second ad on Colors varies between INR 3,830- INR 43,554, which is higher by ~5% than previous financial year (Source
www.theMediaant.com). Comparatively, STAR TV and ZEE TV 10 seconds rate are much higher than Colors TV. We see big
opportunity and upside potential for advertisement revenues of Colors Channels while on CNBC TV18 and CNBC Awaaj, ad
rates are still flat at INR 2,830 & INR 1,400 per 10 second respectively. We believe that there is huge potential in regional
segment as SunTV currently charges INR 27,000 as mix time rate while average realizations for various regional channels
owned by TV18 group are much lower ranging from INR 475 to INR 15,000.
Subscription and Advertising Revenues for TV18
15000 30%

10000 17.8% 20%


13.7% 15.2% 12.6%

5000 10%
987 1141 1284
7997 9211 10851
0 0%
FY16 FY17E FY18E
Advertising Revenue Subscription Revenue
Source: Company, KRChoksey Research
4 KRChoksey - Institutional Research
TV18 Broadcast Ltd.
Potential of Advertisement revenues from Key properties: With investments in new channels, there is a huge
scope for advertisement revenue to pick up in the longer term.

Potential Advertising Revenues

Price Slots Per Hour No. of Slots No of Ad Revenue/yr JV
Channels Timings
(INR) (10 sec) in a day Days (INR Mn) adjustments

Mix time 32,448 72 11.5 365 9806.4 4903.2

Sun-Sat 12.00-19.00 10,007 72 7 365 1840.9 920.4
Colors Sun-Sat 19.00-20.00 29,713 72 1 365 780.9 390.4
Sun-Sat 20.00-22.00 42,146 72 2 365 2215.2 1107.6
Sun-Sat 22.00-22.30 43,554 72 0.5 365 572.3 286.1
Mix time 2,830 84 0 365 86.8 86.8
Mon-Fri 7.00-24.00 575 84 17 260 213.5 213.5
Mon-Fri 18.00-24.00 1,725 84 6 260 226 226
Mon-Sun 8.00-18.00 4,060 84 10 365 1244.8 1244.8
Mix time 1,400 84 12 365 515.1 515.1
Sat-Sun 6.00-18.00 1,750 84 12 104 183.5 183.5
CNBC Awaaj Mon-Sun 18.00-24.00 1,750 84 6 365 321.9 321.9
Mon-Fri 10.00-18.00 1,750 84 8 260 305.8 305.8
Mon-Fri 06.00-10.00 1,750 84 4 260 152.9 152.9
ETV Andhra Pradesh Mix time 3,000 84 0 365 92 46
Mon-Sun 18.00-12.00 475 84 6 365 87.4 43.7
ETV News Gujarati Mon-Sun 12.00-18.00 475 84 6 365 87.4 43.7
Mon-Sun 18.00-24.00 475 84 6 365 87.4 43.7
Mix time 14,881 72 8 365 3128.6 1564.3
Mon-Sat 9.00-23.00 2,080 72 14 312 654.2 327.1
Mon-Sat 13.00-18.00 2,600 72 5 312 292 146
Colors Kannada
Mon-Sat 19.00-20.00 22,100 72 1 312 496.5 248.2
Mon-Sat 20.00-20.30 31,200 72 0.5 312 350.4 175.2
Mon-Fri 21.00-22.00 27,950 72 1 260 523.2 261.6
IBN Lokmat Mix time 600 84 24 365 441.5 220.8
Colors HD Mix time 9,000 72 24 365 5676.5 2838.2
Mix time 5,932 72 7 365 1091.3 545.6
Colors Marathi Mon-Sun 7.00-18.00 2,750 72 11 365 795 397.5
Mon-Sun 18.00-24.00 8,000 72 6 365 1261.4 630.7
Mix time 1,508 72 7 365 277.4 138.7
Colors Gujarati Mon-Sun 7.00-18.00 750 72 11 365 216.8 108.4
Mon-Sun 18.00-24.00 2,000 72 6 365 315.4 157.7
Mix time 3,620
Mon-Sat 19.00-23.00 2,415 84 4 312 253.2 253.2
Sat-Sun 08.00-18.00 1,150 84 10 104 100.5 100.5
Mon-Sun 18.00-24.00 6,500 84 6 365 1195.7 1195.7
Mon-Fri 10.00-17.00 1,150 84 7 260 175.8 175.8
Mon- Fri 06.00-10.00 1,150 84 4 260 100.5 100.5
Mix time 2,731
Mon- sun 07.00-09.00 2,546 84 2 365 156.1 156.1
Mon -Sun 09.00-12.00 2,316 84 3 365 213 213
Mon -Sun 12.00-19.00 2,316 84 7 365 497.1 497.1
Potential advertisement revenues 22,181.90

We believe advertisement revenues are still eon of over all potential of the company. Our blue sky
scenario expects advertisement revenues to double from current levels of ~INR 10 Bn by FY19E.

5 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
Regional business - a big opportunity:

ETVs investment business to turnaround

The Company entered the growing regional space by acquiring a stake in ETV. It currently owns 100% stake in ETV news,
50% stake in ETV GEC via Viacom JV and 24% stake in ETV Telugu. The acquisition has been touted as an expensive one
where total acquisition amount paid by company was INR 19.27 bn, a substantial premium to the prevailing valuation.
However, the acquisition gives the TV18 a foothold into fast growing regional space. ETV acquisition has also
led to better bargaining power with MSOs, DTH players and advertising companies and has enhanced its
presence in M&E space. The company has leveraged on this acquisition by offering wider content at relatively lower cost
by telecasting remakes of successful TV programs in different languages and sharing of resources especially by news

As per data provided by TAM, regional market constitutes 35% market share in terms of viewership and 40% in terms of
advertisement spending and is growing rapidly than peers. Advertisers and brands are actively looking to cash in on
relatively underpenetrated rural markets to establish a strong foothold, especially in television and print media. We believe
that this investment is likely to benefit over the longer term and that the company is likely to achieve breakeven in all three
segments by FY18E. The company is also planning an additional investment in regional space in GEC and news segment.
The company has recently launched Oriya news channels and is planning to extend its news channels to cater to other
regional areas.

Cost efficiency through cross-selling of content

We believe programming cost to remain low due to cross selling of content across various languages. Regional adaptation of
programs like Balika Vadhu, Uttaran and Big Boss has been well accepted by viewers of Colors regional channels. Few
global programs like Big Boss and Kaun Banega Crorepati (Hindi rights owned by Sony TV) have helped regional channels
to deepen and strengthen its presence in their respective genre. We believe with increase of presence in newer regions can
help channels to bring acceptance among viewers (as viewer is already aware about content due to its higher TRPs in other
languages) and improve bargaining power with global production houses while buying rights of television programs.

Faster turn-around of regional channel due to better content programming

At the time of acquisition of ETV Business (Prism TV), not a single channel w as among top 3 players in their genre. Due to
better programming and identification of opportunities in the segment, the company has achieved a spot in the top 3 across
the region. In general entertainment space, ETV Kannada has become a leader in the segment with the market share of
35% as of FY16. ETV has garnered good market share since effective use of content synergies with programs like Big Boss
in Kannada which has generated highest TRP ever for Kannada based regional channels and helped ETV to increase its
market share in the state. The reality show has generated ratings of 5-6 TV Ratings (TVRs) and generated highest
advertising revenue per second for Kannada based channels.

The company has identified regional strategy to be prime driver for the company. There has been constant investment in
regional genre by the company to enhance its presence in regional genre across the regions. The company has improved its
presence in terms with ratings across the languages and launched its second Kannada channel "Colors Super" in Kannada in
the current quarter. We believe this will lead to some one-time expenses in current quarter. As per our estimates, the
operating losses are likely to be in range of ~INR 80 Mn INR 120 Mn for Colors Super in FY17. Colors Kannada continues
to be the largest player in Karnataka with a 36% market share. The channel, a leader in fiction and non-fiction genres,
launched many new TV shows and events and has 5 out of the top 10 shows in the genre.

In the Marathi segment, post rebranding activity last year, Colors Marathi has seen significant growth in its market share.
The channel has enjoyed ~30% plus market share on continuous basis and is now placed at the No. 2 position. Programs
like Filmfare Awards Marathi, Mejwaani and "Ganpati Bappa Moraya" have done well to reconnect with target youth

In near term, Kon Hoeel Marathi Kotipati (KHMC3) is likely to drive ad revenue for Marathi segment. The show has started
with good TRPs and is expected to strengthen its presence in Marathi segment. On the ad revenue front, they have received
four sponsors with a leading detergent company being a prime sponsor for the show. There is a 3 way fight between Star
Pravaah, Zee Marathi and Colors Marathi currently in the Marathi segment. We are expecting competition to intensify post
recent launch of Zee Yuva (Youth Centric Marathi channel by Zee).

Colors Bangla is in process of revamping its strategy as it is still at third position and far behind than its competitors in
terms of market share.

6 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
In the Bengali language, after an initial push due to Big Boss Bangla, ETV Bangla failed to garner significant market share.
Now the Bengali GEC is focusing on untapped afternoon programming hours between 1300 -1600 hours. We believe the
company is likely to gain first mover advantage and will keep a check on content cost by producing remakes of popular
hindi programs like Balika Vadhu and Uttaran. ETV Bangla is third largest player with market share of 10%. As per our
research, focus on fiction is likely to generate growth in market share and help to build viewer loyalties.

Regional General Entertainment

Colors Kannada has been a leader in Kannada GEC space . The channel is a leader in both fiction and non-fiction
genres. It differentiates itself on the basis of a strong programming mix and pushes the boundary on non-fiction
programming by running renowned formats. Top shows include Agnisaakshi, Putta Gowri Maduve, Lakshmi Baaramma
and Kulvadhu in fiction and Super Minute, Dancing Star and Maja Talkies in non-fiction. Colors Kannada was No. 1 in
social media buzz for every month in FY16

Colors Bangla: Company is still distant third, Signature shows in FY 2015-16 included Maa Durga (a mythological show
on Goddess Durga) and Abbulish (a fun-based celebrity game show).

Colors Marathi is a family entertainment channel and a strong No. 2 channel in its genre. Its flagship shows such as
Kamala (based on Vijay Tendulkars play on female exploitation) have highest TRP among all Marathi channels

Colors Gujarati is the only Gujarati general entertainment channel which targets traditional Gujarati households with
innovative and differentiated content. With quality content offerings such as Suri and Food Thi Gujarat, Colors Gujarati
has successfully made inroads in Gujarati GEC space.

Colors Oriya is Odishas first true GEC channel in Orissa given the size of investments. The channel has been picking up
with quality programming, presentation and widespread reach. Colors Oriya is leveraging on local content to attract

Source: Company, KRChoksey Research

Digitization and improved content to increase viewership share of regional channels

Viewership Share (%)

In the late 90s, regional genre was limited to few
FY20 players and lack of quality content was missing. The
43% Indian viewer has been hungry for quality content
FY16 and with entry of national players like Viacom18,
35% Zee and Star TV has helped increase viewership and
improve advertising share.
Due to onset of new launches, improved content and
digitization has helped regional channels to improve
viewership and increase its overall share in Indian
TV broadcasting market.
Source: Industry Reports, KRChoksey Research

7 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
Regional Advertising
Share to overall TV
Advertizing Revenues
The advertising rate has grown much faster in
regional segment and increased ~5-10x in the
last 10 years. There has been a strong
FY12 FY16 FY20
interest from advertisers which has helped
regional broadcasters to do very well in the 29% 33% 42%
last few years.

Source: Industry Reports, KRChoksey Research

Potential Ad Revenues from Kannada Channels

The average revenue per time slot of
Category Channel Kannada channels is in steep discount to
GEC Regional leader in Tamil and Telegu segment despite
being equal in size (the average rate per
Colors Zee
Kannada Kanada slot is INR 15,000 vis--vis in comparison to
Mix time* 14,881 7,030 112% INR 25,000-40,000 per slot charged by
leader in Tamil and Telegu segment).

Colors Zee
Marathi segment is picking up and we
Marathi Marathi
believe Marathi revenue per slot to grow by
Mix time* 5,932 5,825 2%
Source: www.themediaant.com *Mix Time in Per 10 Second Slots
20% CAGR on the back of better
programming by Marathi Channels.

Colors - in transition stage and revenues are at inflection point

In the general entertainment space, there has been consolidation with STAR, ZEE and Colors, which are exchanging top 3
places in last few years. Currently, Colors is the second largest channel in terms of viewership (as per BARC ratings on
annualized basis) and has achieved the distinction of being the leader in terms of viewership for some time during the year.
Colors has gained higher market share in urban area as per BARC ratings while still increasing its presence in rural areas.
The possible reason being the channels late entrance in GEC segment compared to its rivals (Zee was launched in 1992,
Star was in 1998 and Sony TV was launched in 1996).

The unique and innovative programming of channel content with programs like Big Boss, Nagin, Khatro Ke Khiladi and
Indias Got Talent are on top of the charts on a regular basis. The channel has maintained a huge lead over its rivals in
the weekend programming segment.

Average Viewership FY16 in units Mn

500 453
400 319 291 270
100 30
Star Plus Colors Zee TV SAB TV Sony Life OK Sahara One

Source: BARC, KRChoksey Research

8 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
The company has already overtaken Zee and Sony in terms of viewership. However, as per our estimates, subscription
revenue of Colors TV are still lower than Zee and hold good opportunity in improvement in cash flows by better subscription
revenues and lower carriage fees. One of the key characteristic of Hindi Channel space is that it is highly competitive with
very little product differentiator and low brand loyalty among viewers. The differentiation can be done majorly in non-fiction
segment/realty TV segment where company has been a pioneer in programming with programs like Big Boss, Khatro ke
khiladi, Nach Baliye, Indias got talent and Comedy nights with Kapil - which has helped company to gain viewership
sooner than its peers. Few programs have also helped higher ad rates.

Recently, company has received good response to new season of "Big Boss" where ad slots have been sold out in advance.
The company has been in process of expanding its global reach with likely launches in overseas markets. We expect Viacom
JV business to gain by 25% CAGR between FY16 to FY19E, primarily boosted by on the back of new launches, increase in
advertisement revenues, turnaround of regional channels and pick up in subscription business.

High brand recall and Prime-time presence to drive viewership statistics

Timing Key Programs
Colors TVs Sasural Simar Ka is the leader in this slot followed by Zees Sanyukt, Star pluss
Mon- Fri 7.30 pm
Mere Angne Mein.
Zee TVs Zindagi Ki Mahek is the leader in this slot followed by Colors Shakti Astitva
Mon Fri 8.00 pm
Ke Ehsaas Ki .
Sab TVs Tarak Mehta is the leader in this slot followed by Colors Udan and Star pluss
Mon Fri 8.30 pm
Chandra Nandni
Sony TVs Kumkum Bhagya is the leader in this slot followed by ,Star pluss Mere Angne
Mon Fri 9.00 pm
Colors TVs Swaragini is the leader in this slot followed by Stars Yeh Rishta Kya Kehlata
Mon Fri 9.30 pm
Mon Fri 10.00 pm Big Boss on Colors takes top slot followed by Yeh Vaada Raha on Zee.
Mon Fri 10.30 pm Big Boss on Colors takes top slot followed by Zindagi Ki Mahek on Zee.
Weekend 8.00 pm Naagin 2 of Colors is the distant leader in this slot.
Brahmarakshas of Zee is the distant leader in this slot while The kapil Sharma show is the
Weekend 9.00 pm leader in the non fiction segment. TRPs of non fiction segment is higher on weekends on overall
Weekend 10.00 pm Once again this slot is dominated by Big Boss of Colors.
Source BARC data, KRChoksey Research

Top 5 fiction character on Hindi GECs 2015 -16

Rank Character Show Channel In the fiction category, Colors Ashok stands
at number 3 in terms of character recall by the
1 Ishita Ye Hain Mohabatein Star Plus
viewers. In the non-fiction category however,
2 Jethalal Tarak Mehta Ka Ulta Chashma Sab TV
top 4 ranks are dominated by Colors
3 Ashok Chakravarti Ashok Samrat Colors
characters. We believe that strong character
4 Sandhya Diya aur baati hum Star Plus
recall will leader to higher viewership (from
5 Akshara Ye Rishta kya kehalata hai Star Plus
current levels of 453 Mn) and close the gap
Source BARC data, KRChoksey research
between Zee and Colors.
Top 5 Non-fiction character on Hindi GECs 2015-16
Additionally, programs such as Big Boss, Nagin
Rank Character Show Channel
2 and Shakti have helped Colors topple Star
1 Kapil Sharma Comedy Nights with Kapil Colors Plus to grab the no. 1 spot with 732.2 Mn
2 Prince Narula Big Boss Colors impressions. Star Plus has garnered 701 Mn
3 Salman Khan Big Boss Colors Impressions at No. 2, Zee Anmol has stayed at
No. 3 with 507 Mn Impressions, followed by
4 Mandana Karimi Big Boss Colors
Zee TV which has clocked 504.5 Mn
5 Anoop Soni Crime Patrol Sony Impressions.
Source BARC data, KRChoksey Research

Huge Potential for improvement in Ad Revenues Despite Colors being a constant number 2
Category Channel % Difference position, Colors ad rates run at a discount of
GEC Colors Star Plus 31% and 57% during Mix Time and Weekend
respectively, to Star Plus. We are expecting this
Mix Time 32,448 46,882 -31%
gap between Star Plus and Colors to trim down
Sun-Sat 20.00-22.00 42,146 97,412 -57% going forward as Colors strengthens its position.
Source BARC data, KRChoksey Research
9 KRChoksey - Institutional Research
TV18 Broadcast Ltd.
Business news channels continue to witness healthy growth rate
In business channel category, TV18 operates four channels (CNBC TV18, CNBC Awaaz, CNBC Bazaar and CNBC Prime HD).
CNBC TV18 has been the pioneer in Indian business news segment and enjoys first mover advantage in this category,
though new competition has emerged in the past few years with players like ETNOW and Bloomberg with quality
programming and content. TV18 has maintained its market leadership consistently. The penetration of business news
channels has been low and restricted to the metropolitan cities. We believe that advertising fees and viewership of business
news channels is highly dependent on performance of stock market. In last 3 years, investor interest has returned to
market as the new government ushered in 2014 with stock markets having gained around 60% from lows made in 2013. In
the post election period, we have witnessed renewed interest of global investors in Indian markets. We believe strong brand
recall among investors has led to CNBC TV18 universe channels having higher market share despite competition. The
CNBC anchors enjoyed highest recall value in terms of knowledge, acceptance and trust among investors. On the days
when key economic events are being telecast (Union Budget, RBI policy, etc), CNBC universe channels enjoy much higher
viewership than their competitors.

CNBC universe channels continued to be market leaders with market share of ~55% in last 5 years. CNBC TV18 has also
launched a Gujarati channel targeting Gujarati community which has one of highest equity market participation and
received very good response from the viewers. We are projecting EBIDTA level growth of 15% CAGR between FY16-19E for
CNBC TV18 on back of lower carriage fees and higher subscription revenues. We believe commodity markets in the country
are still in nascent stage and likely to witness substantial growth post recent announcement of government to allow options
of various commodities and increase the commodities which can be traded in commodities exchange. We believe in rural
areas and small towns, people are more confident on trading commodities than equities. We believe commodities volumes
to see huge push post new initiatives which will give boost to revenues of CNBC bouquet of channels. We are expecting
advertisement revenues to gain substantially specially in Hindi and Gujarati segment where the average 10 second rates
varies between INR 800-INR 2000 per 10 second.

Rebranding of news channels are paying off

In the news segment, CNN News18 has done several initiatives like Conversation with Mukesh Ambani and Narendra
Modi which has helped CNN News18 to get good rating and clock much higher rating than its competitors specially in urban
areas. We also believe UP State Elections are likely to be one time bonanza for news channels and will lead to improvement
in cash flows of the company. As per our interaction with various advertising research agencies, state elections in 2017 are
likely to bring additional revenues of INR 5 bn for broadcasting companies, of which news channels are likely to get 20% of
overall additional revenue and will generate revenues of INR 1- 1.25 bn . We believe that this will generate additional
revenues of INR 250-300 Mn of revenue for TV18.

Due to elections, the overall share/viewing of news channels is likely to witness a rebound after hitting negative growth
(news viewership dip 20-25% as per latest BARC data) post recent shake up in the industry as lot of channels have moved
towards Free To Air (FTA) regime in a bid to increase their viewership. The CNN news 18 has became clear no. 2 in the
segment and was a leader in urban cities with market share of 39%.

TV18 News Channels Comparative Analysis

Category Channel % Difference
News Channel CNN* Times Now*
Mix time 3,620 3,800 -5%
Mon-Sun 18.00-24.00 6,500 25,300 -74%
CNBC TV18* ET Now*
Mix time 2,830 2,800 1%
Source: www.themediaant.com , KRChoksey Research *in INR per 10 second slots

The recent resignation of Arnab Goswami from a rival channel who is a leader in English news channel segment can be a big
positive for CNN News18 as it will help News18 to strengthen its presence in English news channel genre. We believe
Arnabs exit is likely to hurt Times Now market share and CNNNews18, being a second largest player, is likely to be an
indirect beneficiary of the aforesaid changes.

10 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
We believe in news segment, company has focused on two important aspects: (i) Focus on better programming
and (ii) Strengthening its key management team. The company has brought Amish Devgan on IBN7 platform that
has lot of experience in Hindi media journalism. The advantage of bringing established anchor is better connection to the
viewers and higher rankings. News18 Indias focus will be hardcore national news and targeting young people (15+) since
the network has regional news channels to cater to hyper-local issues. The key markets for the channel are Uttar Pradesh,
Delhi, Madhya Pradesh, Rajasthan and Punjab. We believe huge opportunity exists in terms of higher utilization of ad rates
and higher utilization of air time going forward. On the general news segment, we are expecting uptick in advertising rates
from INR 2,700 per slot to INR 4,000 per slot in next 2 years.

Regional news a big opportunity

In the Information space, the three regional news channels, namely News18 Kerala, News18 Tamil Nadu and News18
Assam/N.E, that were launched during the first quarter of the current year stabilized during the previous quarter and
expanded their reach in the regional news channel segment. These three new channels incurred an operating loss of INR
228 mn during the quarter and are expected to require further investments in near term till they become profitable. We
believe that, being a large player in national news segment, TV18 will have an advantage in terms of content sharing and
speedy broadcasting of content on news channels.

Digital is the next big thing:

Digital Convergence
TV18 is on the right path to create a platform to capture opportunities that will drive growth in the future, however we do
not see any major revenue upside over the next 24-36 months. We believe that any major growth in convergence will only
happen after comprehensive launch of 4G services across India at affordable prices. It is estimated that mobile video will
grow at a CAGR of 62% between 2015 and 2020. Mobile video represented more than half of global data traffic beginning
2012 indicating the growth has already kick started and is here to stay with 4G development and Government of India's
Digital India push.1

Major 4G rollouts
Reliance Jio 29 states, 18,000 cities, optical fiber network of 250,000 route kilometers
Idea Cellular Five south Indian states and plans to launch in 12 circles and over 700 cities
Vodafone Five circles of Kerala, Karnataka, Mumbai, Delhi, NCR and Kolkate
Tikona Digital Planned rollout in 5 circles and 30 cities
Airtel 15 major cities and is expected to expand further
Source: Company, KRChoksey Research

In line with Indias digital revolution, the company is already telecasting its business channels online as well as on mobile
platforms. For eg., Colors had telecasted previous edition of Big Boss 24 hours live on web platform which had generated
good response from the viewers.

Digital content is increasingly becoming main stream, and we believe that company has three fold strategy for Digital era
a) Content available on platforms like YouTube channels
b) Exclusive content for OTTs like Voot.com
c) Focus on niche areas like kids etc.

The company has already tied up for content sharing on RJio platform, which we believe can be a big positive going
forward. The company is likely to be in a preferred offering under RJio platform due to Reliance parentage, which will be a
substantial revenue booster for the company.

Voot: Going for big digital leap

The company has entered into fast growing OTT space with VOOT, which was launched in March 2016 as Viacom18s
exclusive digital video destination. VOOT has been designed to have content from network properties and exclusive content
around reality shows. For example, lot of exclusive content of Big Boss is only available on VOOT platform. VOOT also has
the largest collection of kids content in India and the largest number of original shows for any Indian OTT service. The
advantage of kids content is higher repetitive value of content in programming. One of the smartest strategies of the
company is to not invest heavily in movie space, which has lower RoIs and higher viewership time (which is still not
accepted by digital viewers).

11 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
The average viewership on digital platform is around six minutes on small shows as per latest media reports. We believe
smart phones and mobile data becoming affordable with 4G advancement and higher penetration will lead growth of OTT
platform in the country. One of the key characteristics of OTT segment is people are still reluctant to pay for OTT segment
as Youtube is still a large player, offered for free and a partner for digital growth of the country. We believe that in the next
few years, the focus will be on higher viewership, which will bring higher advertising revenue for the OTT players. We also
believe it will lead to develop VOD business in long term which will improve subscription revenues. The company has tied
with Turner broadcasting also for content on VOOT.

Comparative Analysis of Hotstar, Voot and Ditto TV

Particulars Hotstar Voot Ditto TV
JV of Viacom 18 and
Service Provider Star TV Zee TV
Reliance Industries

Launch Date February, 2015 March, 2016 February, 2012

All shows of Zee, Colors,

Sony, &TV, Zoom , MTV,
All shows of Star, Asia Net, Cartoon Network,
Life OK, MAA TV, Channel V, Times Now, MAA TV, Ten
No. of Channels/ Shows All shows of Colors, MTV
Suvarna, National Cricket , Aaj Tak, Zindagi,
Aired and Nickelodeon
Geographic Channel, Baby Epic, Living Foodz, CNBC,
TV BBC, Ten Cricket, India
Today, Al Jazeera, CNN
News18, Travelex

Exclusive Website Yes (Hotstar.com) Yes (Voot.com) Yes (Dittotv.com)

Sports shows and matches Delivers Live TV, Provides

are aired on the app. HD content .
TV shows can be The content on this app
Special programs for kids
downloaded for offline can only be viewed after
Differentiation which is not available on
viewing while movies taking a subscription plan
Hotstar and Ditto TV.
cannot be downloaded. unlike free content that is
The app plays an available on Hotstar and
unskippable add for 1 min. Voot.
Hindi, English, Malayalam,
Hindi, English, Kannada, Hindi, Marathi, Bengali,
Languages Offered Tamil, Bengali, Telugu,
Marathi, Bengali, Gujarati Kannada, Telugu, Tamil,
Marathi, Kannada
Romance, Drama, Family,
Reality, Comedy, Crime,
Genres Offered Comedy, Drama, Reality, Drama, Comedy, Music,
Action, Talkshow, Teen,
Voot Kids Horror.
Award shows, Science,
Travel, Wildlife
Movies available in all
languages mentioned Movies allowed to stream
Movies produced by Viacom
Movies Offered above. only after subscription is
Latest movies also paid.
All Access pack/month
No Subscription fees. No Subscription fees.
Rs 150
Charges Content can be seen free of Content can be seen free of
3 months Rs 370
cost. cost.
1 year Rs 1200
Platform Android, IOS, Android, IOS, Windows Android, IOS, Windows
India, United States,
United Kingdom, United
Areas Served Only in India Only in India
Arab Emirates, Australia,
New Zealand, Pakistan
Source: Industry reports, KRChoksey Research

VOOT has fastest downloads of 10 million units in shortest period of time compared to peers like HotStar & Ditto TV.
VOOT has highest viewership of 1.6 mn viewers on average, which is higher than HotStar. We expect downloads to touch
45 mn by FY18E with the help of better and unique programming, better access to high speed data services and smart
phone penetration. The average viewership per user per day is around 45 minutes which is much higher than its peers.
Higher Viewership helps company to focus on higher advertisement revenues which is still in nascent stage at this point of
time. We are expecting VOOT to touch revenues of INR 500 Mn by FY19E and should break even in 5-7 years.
12 KRChoksey - Institutional Research
TV18 Broadcast Ltd.
Why TV18 offers an opportunity for a big upside and a case for better operational performance:
TV18 was in financial crunch due to higher debt between 2008 and 2012, investment in newer channels & digital space and
restructuring, which has hurt profitability of the company. We believe that restructuring process is almost over and we may
see earnings pick up FY18E onwards. Zee has hived off its relatively loss making and capital intensive news business in
2009, which has helped Zee improve its operational performance on overall basis.

Financial Walkthrough to Q2FY17 Financials

Particulars INR Mn Reason
In the Entertainment space, Viacom18 launched its second regional
Adjusted Q2FY17Revenue
entertainment channel in the Kannada market branded as Colors Super in
(incl. proportionate share of 701
July 2016 to further strengthen its pole position. MTV Beats, a 24*7 music
television channel, has replaced MTV Indies during Q2FY17.
The aggregate impact (Voot, Rishtey Cineplex) on the operating loss of
the new initiatives of Viacom18 considered in the consolidated segment
results is INR. 341 mn.
During the quarter, Prism TV Private Limited, (regional entertainment
channels), a Joint Venture between TV18 and Viacom Inc. USA, was
Operating profit (as per Ind merged with Viacom18 pursuant to the Scheme of Arrangement approved
AS) by the order of the Honble Bombay High Court on 12th August 2016.The
consolidated segment results for the quarter includes a onetime expense
relating to merger (including stamp duty) of INR 70 mn
FYI TV18, a lifestyle programming channel from the AETN18 stable (a JV
between TV18 and A+E Networks), was commercially launched on July 4,
2016. The channel incurred an operating loss of INR 92 Mn during the
July-Sept quarter.
During the quarter CNN -IBN was re-branded and re-launched as CNN -
Adjusted Q1FY17 246 News 18. A one-time expense of INR 35 Mn towards re-branding was
incurred during the quarter.
Three new channels - News Kerla 18, News 18 Tamil Nadu and News 18
Aasam / N.E were launched in the month of April. These channel
accounted for INR 139 mn of the overall opertaing losses for the quarter.

Rishtey Cineplex, a Hindi movie channel and VOOT, Viacom exclusive

digital video destination in the Over The Top or OTT space, were launched
in May 16. Viacom 18 also launched HD channels in Kannada, Marathi and
Bangla during the quarter. The aggregate operating loss attributed to
these new initiative of Viocom18 in the consolidated result is INR 292 Mn.

FYI, a factual entertainment channel from the AETN 18 stable (a JV

between TV18 and A&E Network ), was commercially launched on 4th July
2016. the operating loss of INR 54 Mn for this channel included in the Apr-
Jun quarter.
In H1 FY16, there was loss of INR 190 Mn on account of new ETV news
Adjusted Q4FY16 290 channels; there was also a one-time expense of INR 100 Mn for
rebranding ETV regional entertainment channels as Colors.

9M FY16 includes operating loss of INR 450 Mn on account of new ETV

Adjusted Q3FY16 one-time
550 news channels and Colors Infinity and also a one-time expense of Mn 100
Mn for rebranding ETV regional entertainment channels as Colors.

In H1 FY16, there was loss of INR 190 Mn on account of new ETV news
Adjusted Q2FY16 290 channels; there was also a one-time expense of INR 100 Mn for
rebranding ETV regional entertainment channels as Colors.
The Exceptional Items in our consolidated financial results for the quarter
include a payout of one time severance costs and write-offs of INR 234
Adjusted Q2FY14 2340 Mnres incurred on account of a restructuring programme to realize
operational synergies. These are partially offset by certain write-backs
relating to prior periods.

The losses from the Motion Pictures business were primarily on account of
Adjusted Q1FY14 ---------
the tepid audience response received by Bombay Talkies.
Source: Industry reports, KRChoksey Research
13 KRChoksey - Institutional Research
TV18 Broadcast Ltd.

Expect reduction in Marketing and Distribution expenses to improve margins

We estimate marketing and distribution expenses to reduce from 18.1% of overall revenue in FY16 to 15.0% of revenue by
FY18E as we believe that the M&D expenditure cycle related to new launches and re-branding activities will reduce going

EBITDA margins trajectory

20% 18.1%
18% 16.9%
15.0% We expect EBITDA margins to increase from
14% 15.6% 10% in FY16 to 15.6% by FY18E. We believe
12% that majority of the M&D expenditure cycle for
10% new channels and re-branding activities is by
8% 10.0% gone. We also expect reduction in one-time
6% expenses to render margins sustainable.
FY16 FY17E FY18E

Mktg. & Distr. Expenses (%) EBITDA Margins (%)

Source: FICCI KPMG report, KRChoksey Research

TV18s subsidiary margin profile

22% We expect TV18s consol margins to be largely
25% 21% 19% driven by improvement in margins of various
20% 23% JVs. We expect improvement in Viacom18s
17% margins to increase from 17% in FY16 to 22%
10% 14% in FY18E led by improvement in ad revenue
5% 10% realizations. Additionally, we estimate de-linear
0% growth and absence of one-time expenses to
-5% FY15 FY16 FY17E FY18E drive ETVs margins as well.
-10% -4%

-15% -11%
-20% -15%

Viacom 18 ETV AETN18

Source: FICCI KPMG report, KRChoksey Research

Investments in last few quarters will start yielding going forward

Financials of JVs/Associates (INR Mn) FY16 FY17E FY18E
Revenues 22863 28165 31894 Viacom18 margins to pick up and
EBITDA 3790 5248 6881 likely to touch ~22% by FY18E from
PBT 3294 4782 6444 current 16%.
ETV Regional Channels
We expect investments in regional
Revenues 4099 5070 6273
channels to turnaround owing to
EBITDA -452 -221 476
maturity of new channels which
PBT -452 -221 476
were launched during FY15 and
AETN18 FY16. Expect ETV Regional Channels
Revenues 591 773 873 to turn EBITDA positive by FY18E.
EBITDA 122 80 204
PBT 122 80 204
Source: KRChoksey Research

14 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Zee Entertainment and TV18 Comparative Analysis (INR Mn)

50,000 45,221 30,000 27,129
40,347 23,628
40,000 20,578
20,000 18,022 17,944
30,000 26,603
22,408 10,000
16,045 4,520 5,170
10,000 3,138 3,769
12,410 13,750 5,000 2,538

0 0
FY14 FY15 FY16 FY17E FY18E FY14 FY15 FY16 FY17E FY18E

Zee Adv. Rev. TV18 Adv. Rev. Zee Subs. Rev. TV18 Subs. Rev.

Source: Bloomberg Estimates, KRChoksey Research

Despite TV18 holding higher market share since last FY14, the subscription revenues and advertising revenues of TV18 are
much lower than Zee entertainment (as shown in the graph above). As of FY16, TV18s advertising revenues are 52% lower
than that of Zee whereas subscription revenues are 82% lower than Zee. However, going ahead, we believe that this
difference will trim down as TV18s bargaining power with advertisers and cable operators increases and subscription
revenues will pick up due to digitization.

Expect margin gap between TV18 and Zee to narrow down on the back of improved performance
30.0% 28.0%



FY16 FY17E FY18E

TV18 Zee

Source: Company, KRChoksey Research

Historically, Zee has enjoyed better margins than TV18 due to its divestment of news business and first mover advantage in
the GEC space. We believe that TV18s margins are likely to grow by 500 bps annually by FY18 as newly launched channels
start maturing and marketing and one-off costs reduce. Historically, industry trends dictate that it takes 2 to 4 years for a
channel to break-even as marketing/branding expenses fade out, one-off expenses reduce and personnel expenses are

15 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Balance Sheet repaired by rights issue and strong promoter backing

In FY13, the company had raised INR 27,000 Mn during turbulent times via rights issue to fund the acquisition of ETV,
repayment of debt and capital requirement for investments in future growth. The right issue has been criticized by market
as it has lead to high dilution of equity by the company. During that challenging period, Reliance Industries has taken part
in right issue as being a share holder post acquisition of ETV stake by the company.

However, we have witnessed that the rights issue has been EPS dilutive in short term. In the long term however, it has
helped management to focus on value creation rather than focusing on operational issues such as a highly leveraged
balance sheet post ETV acquisition or concerns about losses in newer investments. Indias largest corporate, Reliance
Industries has become a large shareholder and a promoter in the company post the rights issue after the resignation of
erstwhile promoter Mr Raghav Bahl. The company has also sold 50% stake in its regional JV to Viacom in a bid to improve
its cash flows amid investments required for future growth of the company.

TRAI hike - a positive move by broadcasters

We expect broadcasters to maintain its profitability as a result of the TRAIs stance of continuously supporting broadcasters
by constant hike in monthly charges. Monthly charges have been on a linear rise across the regions. The approval for a
27.5% inflation-linked hike in tariff ceiling in 2015 for non-addressable cable areas was a positive hike and has been
absorbed by the market. These consistent hikes are positive move for the industry and will drive Average revenue per user
(ARPU) higher. ARPU at the Multi System Operators (MSO) end is largely determined and controlled by the Local Cable
Operators (LCO) in non-addressable cable areas. Cable TV subscribers will have to pay higher monthly bills with LCOs
pushing for a raise in market. It will be tough for LCOs to pass hike to consumers in analog system whereas in digital
addressable system (DAS) areas the retail pricing is left to market forces.

The broadcasters have gained after witnessing a short term blip on their revenue post dilution of content aggregators role
by TRAI. The move to up the tariff ceiling will have a positive impact on the broadcasters. A 27.5% rate increase is
substantial and broadcasters like Zee Entertainment Enterprises Ltd, Star India, TV18, Multi Screen Media (MSM) and Sun
TV Network will have an advantage while negotiating with the distribution platform operators.

Financial Overview
We believe TV18 has been investing in developing media assets and has been going through consolidation since last few
years, As mentioned earlier, TV18 is at inflection point and we believe company to post healthy profitable growth going
ahead. We are expecting revenue to grow by 7% between FY16 - FY18E and expecting better growth in future for the
company. We believe margins have potential to reach 25%+ from current levels of ~10% in next 4 years on back of higher
revenues and lower costs. We are expecting margins to see steady recovery through FY18 and expecting margins to touch
15% in FY18E. We are expecting investments in regional, news and infotainment segments to slow down going ahead which
will improve ROCE and ROEs as well. We are expecting ROCE and ROEs to improve from 1.9% and 5.6% FY16 to 3.4% and
9.7% by FY18E respectively.

16 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Industry Analysis
Indian Media Industry
The media and entertainment industry consists of many different segments under its fold such as television, print, and
films. It also includes smaller segments like radio, music, OOH, animation, gaming and Internet advertising. The
entertainment industry in India has registered explosive growth in last two decades making it one of the fastest growing
industries in India. From a single state owned channel, Doordarshan in the 1990s, there are more than 900 licensed
channels in the country today. The rising rate of investments by the private sector and foreign media and entertainment
(M&E) majors has changed the landscape India's entertainment infrastructure. In the recent times, new avenues have been
pushed in many ways for the Media and Entertainment (M&E) industry.

The several new initiatives and platform have added hope for further growth of the industry. The recent launch and
expansion of a host of new services, notably OTT (Over The Top), Hindi and regional feeds on social media as well as
significant original programming

As per the FICCI Media 2016 Report, the Indian M&E industry is on growth path and expected to touch INR 2,260 billion by
The Indian Media & Entertainment industry: Size

Overall industry size Growth in 2015

2010 2011 2012 2013 2014 2015
(For calendar year) over 2014

TV 297 329 370.1 417.2 474.9 542.2 14.2%

Print 192.9 208.8 224.1 243.1 263.4 283.4 7.6%
Films 83.3 92.9 112.4 125.3 126.4 138.2 9.3%
Radio 10 11.5 12.7 14.6 17.2 19.8 15.3%
Music 8.6 9 10.6 9.6 9.8 10.8 10.2%
OOH 16.5 17.8 18.2 19.3 22 24.4 10.9%
Animation and VFX 23.7 31 35.3 39.7 44.9 51.1 13.8%
Gaming 10 13 15.3 19.2 23.5 26.5 12.8%
Digital Advertising 10 15.4 21.7 30.1 43.5 60.1 38.2%
Total 652 728 821 918 1,026 1,157 12.8%
Source: KRChoksey research, FICCI Media 2016 report

Media industry faces high growth prospects: The future of the media sector is linked to the growth in the economy.
Higher surplus income encourages people to spend more on discretionary items like media and entertainment. With metros
witnessing stable growth, regional & rural markets provide ample scope for growth in the media sector. With the evolution
of new technologies like OTTs and YouTube, the growth of media sector is ready to set new benchmarks at a healthy pace.

Indian Television Industry: The Indian television industry size has increased from INR 47,400 crores in 2014 to INR
54,200 crores in 2015, a growth of 14% YoY basis and expected to touch 1,097 Bn by FY20 respectively, according to FICCI
Media 2016 Report.

Media spending trends which will drive advertisement growth: In 2016 television will continue to lead the industry in
terms of revenue contribution with 39% share of revenues as compared with 40% in 2012.Another dominant sector in 2017
is expected to be internet access with 28% share of sector revenue, significantly higher than 18% in 2012. The major
growth in the revenue of television can be attributed to the Digitization of cable which is expected to bring in transparency
and increase subscription revenues for Multi System Operators (MSOs) and broadcasters. It is also expected to reduce
carriage fees, building a case for the launch of niche channels and investment in content for existing channels. From cost
recovery point of view, Cable TV networks are now free to recover digitization costs from broadcasters through Carriage
Fees. Earlier they were charging the consumers for it. Carriage fees borne by broadcasters are estimated to be around INR
38000 mn.(US$ 650 Million) annually approx up to 2015.
The split of revenue between advertising and consumer payments has undergone a change over 2012-17. The share of
advertising revenue in total E&M sector revenues is expected to reduce from about 35% in 2016 to about 32% in 2020.
Correspondingly, the share of consumer payments is expected to increase from 65% in 2012 to 68% in 2017.

Media Industry Forecast

INR Bn 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
TV Industry Size 417.2 474.9 542.2 617 709.6 823.3 956.8 1097.6 15.1%
Advertising Revenue 135.9 154.9 181.3 210.3 241.8 275.7 319.8 364.5 15.0%
17 KRChoksey - Institutional Research
TV18 Broadcast Ltd.
Source KRChoksey research, FICCI Media 2016 report
Advertisement revenues hit by slowdown however turnaround hopes are there: The advertising in television
broadcasting industry is still under penetrated and growing faster than other forms of media advertising (12% CAGR in last
5 years) despite of challenges in the industry like lower capex by industry, slow down in spending and higher competition
among industry.

Digitization of television

600 Broadcasting Industry to move multifold


400 365
INR Billion

200 210
136 155
100 116 125 203
145 174
86 100 118
47 57 69 75
2011 2012 2013 2014 2015 2016P 2017P 2018P 2019P 2020P

Advertising Revenue Subscription Revenue

Source KRChoksey research, Industry reports

Advertising prices faced pressure from the global and domestic economic slowdown, rural slowdown etc. resulting in lower
than expected increases in advertising revenues for the broadcasting companies. We expect that advertisement revenues
will improve with forthcoming elections. In the long term, however, India continues to be a growth market, and the
advertisement market is expected to grow at a CAGR of 11% over 2016-21 as per FICCI Media Report 2016.

200 No. of subscribers

180 22 22
160 19
140 10
9 78 79
120 9 44 55 74 76
8 40
100 34

80 19 25 29 37
80 84 87 90
40 74 69 70
68 65
20 41
0 5 5 5 5
2011 2012 2013 2014 2015 2016P 2017P 2018P 2019P 2020P
Free DTH Pay DTH Digital Cable Analog Cable
Source KRChoksey research, Industry reports

18 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

19 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
Other key industry drivers
Digital - a big opportunity for the industry: The shift from analogue to digital has ramifications for players such as TV18
that extends beyond television. We believe digital growth is an equally potent lever, with digital consumers spending
approximately 1.5x the time on media versus unconnected counterparts. Digital growth is secular and consumption spike
shows across demographic and income variables. The only driver for digital consumption is digital age with consumers that
spend more than 2 years online showing an inflexion and significantly higher growth.

We believe Digital consumption of media represents a large database of consumption patterns, viewing habits and
consumer content preferences. Leveraging this data intelligently can help content creators customize new content to
consumer tastes and preferences to create targeted hits and subsequent success. With this, India's rural growth story is
sure to replicate China's growth in rural consumption as observed in the past. As penetration and content supply for digital
media increased in China, smart phones replaced TVs as the preferred viewing screen. Today, China's rural consumers
spend more time consuming digital media when compared to other media forms. We believe going forward, digitization to
grow as Phase I nears completion and Phase II and III advance in implementation as well as unlocking strategy of
monetization of content on various platforms.

Indian consumers are beginning to consume television content on non-TV devices like smart-phones, tablets, and personal
computers. With the rapid growth expected in broadband internet usage, new telecom technologies like multiple device
consumption is expected to grow exponentially in the coming years. According to Industry report, the broadband internet
subscribers are likely to move from 60 million in 2017 to over 150 million in 2019.
1000 Internet Users (million)

800 33
600 28
25 792
400 671
23 564
21 470
2015 2016 2017 2018 2019 2020
Wireline Wireless
Source KRChoksey research, Industry reports

Steady growth in social and economic status The steady increase in disposable incomes, change in spending habits
in rural segment and a fast growing middle class have helped the Media and Entertainment sector in India. The relaxation of
rules to allow foreign brands to establish themselves in India has further boosted this trend.

Regional & Niche channels to drive growth: The Indian Regional Channels broadcast programs on various state
dominant languages which has been ignored by bigger players during first 10 years of Indian Broadcasting space. In the
initial years, regional channels are largely state specific ex SUN TV which is largely south lingual player. The private regional
channels are neither completely entertainment channel nor exclusively news channel initially. To some extent, these
channels follow the format of Doordarshan. The faster growth in advertising revenues and increasing viewership has
provided the drive for many big players to enter into the regional business. Some regional media leaders like Sun TV, have
a strong grip over the regional market. Moreover, major national networks, like Star Network, Zee Network have also
realized the importance of such channels, and thus have launched many regional channels post 2000, which has helped
quality of content in regional players.

Zee network has come up with a number of regional channels in Marathi, Punjabi, Bengali, Kannada, Tamil, Urdu, Telugu
along with a number of music and movie channels. Star Network entered into Tamil Nadu by launching Star Vijay, one of
the most popular regional channels. But now has channels in Bengali, Malayalam, Telugu, Kannada, and Marathi space.
TV18 has regional channels in 8 different languages, which include Telugu (24% stake), Bengali, Marathi, Kannada, Oriya,
Gujarati, Urdu and Hindi. We expect regional markets to see immense growth over the next few years. The share of
regional channels has increased from 29% to 34% of overall viewership in the country as regional gaining market share in
over all TV segment. The Tamil, Telugu, Malyalam, Marathi , Kannada & Bangla constitute ~85% market share of all
regional channels and command an advertising market share of 33%, which is in proportion to their viewership share. The
Advertising interest in regional markets is strong and broadcasters see immense potential for revenues from local
advertisers who may be willing to pay a premium to reach their targeted audience. The lower ad rates and rising income of
target audience are key drivers for regional markets.

20 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
The regional channels are more isolated from the economic slowdown than national channels. We also believe with as
progress of digitization will also open up avenues for broadcasters to launch subscription driven, specialty channels in India
and also provide an opportunity to insert localized content and advertising, translating into premium advertisement rates.
Growth in the number of niche and regional channels will have an inclusive and expansionary impact on the television
sector. The emergence of targeted and focused channels will allow advertisers to derive maximized value and at the same
time increase the participation of local and regional advertisers, thus impacting sector revenue growth. The regional
channels have been supported by platforms like zing which will drive revenues for regional players.

2.1% Kannada
Malayalam The overall pie of regional channels in
Bengali overall TV channels has been on constant
6.6% rise and expected to cross 40% by 2020.

Source: KRChoksey Research, FICCI Media Report 2016

Potential in HD and premium viewing: There has been a dramatic shift in the industry from TV industry from CRTS to
LCD and LED TV sales which is due to increase in affordability and , which are expected to grow to around 25 million units
by 2020 ( Appx.100% of TV annual sales in 2020E) from 15 million units currently, broadcasters and DTH players have
expanded their HD offerings going forward. As of now, average MSO/DTH players offer close to ~10-50 channels in HD
segment which has a smaller pie in overall subscription market. With an increasing uptake of affordable HD TVs as entry
levels HD TV prices have fallen from INR 60000 to INR 15000 currently, consumers may be willing to pay a premium for a
better viewing experience on these television sets. While HD penetration amongst the existing subscribers is low, this is
expected to increase significantly at 25% CAGR till FY20.

The key differentiator between global and Indian TV subscription is Indian consumer generally pays monthly charges than
on Pay per View basis. The demand for HD channels amongst consumers is moving beyond specific events, sports and
movies. More and more channel have started offering HD Content in recent times, recently regional channels like Colors
Marathi, Zee Marathi etc has also started offering content in HD segment. The recent regulations also proposed the cap of
HD content to 3x of SD Channels, we believe that the prices of HD channels are still between 1.5x- 2x, thus hold potential
for further increase in prices of HD TV segment. We are expecting strong demand from rural segment on back of conversion
of CRTs to HD TV segment.

Increasing penetration of TVs and Cable & Satellite homes: Even today, a large number of Indian households do not
have access to television, especially in the rural areas. This trend has been changing in recent times with increasing
affordability, strengthening distribution, easing of hardware prices and growing awareness levels, the countrys television
footprint is set to expand further going forward. We believe with the increase in consumption power, many households are
now opting for multiple television sets expanding the market further. As per Information and Broadcasting (I&B) ministry
estimates, institutional and multi TVs account for approximately 55 percent of television sets in metro cities (Source: FICCI
KPMG Report 2015). We believe that 31% of urban household in Mumbai now have multi TV in their home. External factors
such as increasing access to electricity (especially in rural areas) and the continued delivery of quality content are further
enablers of greater penetration in the Indian television industry.

21 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
TV Household and paid C&S penetration of TV households
250 100%
87% 90%
71% 200
200 80%
million 150 138 60%
100 40%
50 20%
0 0%
2010 2015 2020P
TV Houshold Paid C&S penetration of TV housholds
Source: KRChoksey Research, FICCI Media Report 2016
Segment of C&S Subscribers: While the TV penetration in India has increased to 175 million (83%) in 2015, the total
number of Cable & Satellite (C&S) subscribers have also grown to 160 million. Within this universe, the number of analog
subscribers has fallen to 65 million or a little over 40% and is expected to fall further to just around 2.5% by 2020 as the
transition to digital will be completed.

ARPUS are on inflection point: Realizations from pay TV subscription is expected to increase with the rise of digital
platforms such as DTH and digital Cable. As per the FICCI-KPMG report The television industry in India is estimated at INR
550 billion in 2016, and is expected to grow at a CAGR of 12 percent over 2016-20, to reach INR 950 billion in 2017 aided
by digitization and the consequent increase in ARPUs (Average Revenue Per User), the share of subscription revenue to the
total industry revenue is expected to increase from 65 percent in 2016 to 75 percent in 2020.We believe DTH/MSOs
continue seeding of STBs, the MSOs are in the last leg of finalizing commercial contracts with broadcasters and local cable
operators. The broadcasters are likely to benefit over the longer term as current DAS contracts are for short terms (12-18
months), thus leaving room to renegotiate on a per subscriber basis as and when seeding achieves completion and as more
subscribers are added will lead to higher subscription revenues.

ARPU for DTH and Digital Cable 367

334 343
299 298
258 266 261
214 219 230

2015 2016 2017 2018 2019 2020

DTH Digital Cable

Source: KRChoksey Research, FICCI Media Report 2016

Digitization to support growth: With Phase I and II of cable digitization completed and phase III and IV underway, India
has an estimated digital C&S subscriber base of around 160 million, as at the end of CY15. Nevertheless, both phases III
and IV are running behind schedule. While the Ministry of Information & Broadcasting extended the deadlines for DAS Phase
III and IV implementation from the earlier combined deadline of December 2014 to December 2015 and December 2016,
respectively, the rollout of Set Top Boxes (STBs) are not likely to be completed before December 2017. Further, the
expected benefits, in terms of improved addressability and Average Revenue per User (ARPU) are expected to pick-up with
a delay too.

DAS has been a game changer for overall growth of Indian television ecosystem. DAS has been launched and pushed by
government to overcome the failure of earlier CAS. Digital cable has the capacity to carry 1,000 Standard Definition (SD)
channels which far surpasses that of CAS, which can only carry 250-300 SD channels at present due to limited transponder
availability. In terms of technology, digital cable is capable of having a return path, which is not possible in the case of
CAS and earlier technologies and this limits the latters scope to provide value-added services and dual play. Digital cable is
able to provide a larger number of regional channels, and given that growth of the Indian media sector is fueled largely by
regional content, makes it essential to use digital cable technology.

22 KRChoksey - Institutional Research

TV18 Broadcast Ltd.
Digitization has led to elimination of under subscription by LCOs and this will in turn bring higher revenues for MSOs and
broadcasters. The governments decision to digitalize television networks across the country has resulted in a huge
opportunity for broadcasters. With phases one (top-four cities in the country) and two (the next 38 cities) nearly complete,
the government is on course to complete phase three (all remaining urban areas) by the end of the year. The opportunity,
which has revolutionized the way people consume content on television, presents a lucrative opportunity for greater
monetization for cable and direct-to-home operators. The shift from analogue to digital has ramifications for players such as
TV18 that extends beyond television.

Subscirber statistics and forecast (units Mn)

20 21 22 22
10 15 19
8 9 9 40 44 55 74 79 78 79
31 34 37
6 19 25 29 37 55
74 69 68 70 65 80 84 87 90
41 5 5 5 5
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Analog Cable Digital Cable Pay DTH Free DTH
Source: FICCI-KPMG India Media and Entertainment Industry Report 2016
Channel Statistics and Forecast (units)

1400 1280
1220 1120
1060 985
821 920 855
794 740
572 638 660

2010 2011 2012 2013 2014 2015 2016 2017

Number of Licensed channels in India Number of Opertaional channels in India
Source: FICCI-KPMG India Media and Entertainment Industry Report 2016

Digitization: Current scenario:

Rollout of set up boxes: Despite policy bottlenecks the, digitization of cable television distribution grew leaps and bounds
in across the country. The Collection of CAF is almost complete in both Phase I and phase2 cities (except for Chennai) and
MSOs are moving forward towards starting gross billing. While in phase 3, 76% seeding of set top boxes were done as per
data on March 2016. In Phase 4, the set top boxes roll out is much lower than market estimates and currently at less than
20% as on July 2016. On the collection front, In Phase 1,2 &3 cities, MSOs have reportedly completed the process of
collection of CAF. However in Phase3 cities, this process is in various stages of completion and TRAI has extended the
deadline for completion of CAF collection for Phase 3 cities.

Billing issues are slowly easing out: The MSOs are now in the process of moving subscribers from net billing to gross
billing. As such, a move to gross billing is the first step towards acceptance of the changed ecosystem in a digitized
environment by consumers. TRAI has directed MSOs and LCOs to start providing the bills including taxes to subscribers.
MSOs had to ensure that they or their LCOs provide a proper receipt for every payment made by the subscriber. However
differences over billing responsibilities continue to result in a tussle between the MSOs and LCOs in Phase I and phase 2
cities. Having made huge capital investment in the rollout of STBs, the MSOs want to have control over billing the
subscribers, while the LCOs are concerned about losing control of the subscribers to MSOs on transfer of billing rights to
MSOs .This deadlock was been started easing out in most of the areas when most of the large MSOs agreed to bill the
subscribers in the LCOs name with the inclusion of the MSOs name and logo on the bill. The TRAI has recommended a
revenue share of 55:45(MSO:LCO) for the basic free to air (FTA) tier and 65:35 (MSO:LCO) for a combination of FTA and
pay channels.

Technology: At the MSO LCO relationship, LCOs are the face of the company to the consumer and an important part of
overall value chain. By the use of technology MSOs and DTH players are offering efficient collection management system,
Electronic KYC and a medium through which they can communicate notifications, offers and schemes. These initiatives
enables reduction in operating costs, faster and more flexible services and a more effective marketing channel among
subscribers. This will result in better revenues for the ecosystem and higher ARPUs for the broadcasting companies too. we
expect monetization of Phase-III and phase IV to take place at a much faster rate as required infrastructure, in terms of
distributed set top boxes is already in place which will boost revenues of overall ecosystem.
23 KRChoksey - Institutional Research
TV18 Broadcast Ltd.
Phase by Phase Segregation of Digitization in India
Regulatory date No. of C&S subs* Non-digitised Digitisation including
for shutdown (mn) subs (mn) DTH*
Phase I 12-Jun 13 1.2 100% excl Chennai
Phase II 13-Mar 25 1.2 >95%
Phase III 15-Dec 41 10 -75%
Phase IV 16-Dec 81 52 -35%
Total 160 65 -60%
Source: KPMG in Indias analysis 2016 based on data collected from industry discussions * Including DD FreeDish

Favorable policy initiatives by government

The Indian government has taken various initiatives for the Media and Entertainment industry. These include:In
broadcasting, the FDI limit was increased from 26% to 49% via the Foreign Investment Promotion Board (FIPB) approval
route for news and current affairs television channels; the limit for non-news and current affairs television channels remains
at 100%, but does not require an approval from the FIPB now.

Easing of sector by government to aid growth and ease liquidity constraints:

Sector Earlier Limit New Limit

DTH, cable networks (MSOs operating at national and 74% (Up to 49% - direct
100% (Up to 49% - direct route,
disltrict level and undertaking up-gradation of networks route, beyond 49% - FIPB
beyond 49% - FIPB approval)
towards digitisation and addressability, mobile TV, HITS) approval

Cable networks (Other MSOs not undertaking up-

gradation of networks towards digitisation and 49% (direct route) 49% (direct route)
addressability and LCOs)

Up-linking of 'News and current affairs' TV channels 26% (FIPB route) 49% on FIPB approval

Up-linking of 'Non news and current affairs' TV channels 100% direct route No Change

Down-linking of TV channels 100% direct route No Change

Source: KPMG in Indias analysis 2016 based on data collected from industry discussions

24 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

25 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Key Shareholders
Shares as % of Total No.
No Name of the Shareholder Total Shares held
of Shares
1 Shinano Retail Pvt Ltd 85,173,200 4.98
2 Government Pension Fund Global 36,900,000 2.16
3 Derive Trading P Ltd 26,398,291 1.54
4 Jhunjhunwala Rekha Rakesh 25,210,000 1.47
5 Reliance Capital Ltd 24,812,156 1.45
Route One Investment Company LP A/C
6 Route One Fund LP 24,993,190 1.4
7 Route One Investment Company LP A/c
Route One Offshore Master Fund LP 22,782,679 1.33
8 Danske Invest Management Company SA
A/C Danske Invest Sicav SIf Emerging And
Frontier Markets SMID 18,500,561 1.08
9 Bright Star Investments Pvt Ltd 17,724,888 1.04

Key Management Personnel

Name Designation
Mr. Adil Zainulbhai Chairman
Mr.Dhruv Subodh Kaji Director
Mr. Rajiv Krishan Luthra Director
Ms. Nirupama Rao Director

26 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Consolidated Financials (INR Mn) FY16 FY17E FY18E

Revenues 10,521.4 10351.1 12,135.5
Operating Expenses:
Programming Expenses 869.1 0 0
Employee Expenses 2875.9 3111.4 3519.6
Mktg. and Distrbn Expenses 1904.5 1745 1851
Other Expenses 3815.9 4331.2 4905.1
EBITDA 1056.1 1163.5 1859.7
Margin 10% 11% 15%
Depreciation and Amortization 356.1 380 403.7
EBIT 700 783.5 1456.1
Other Income 501.1 571.9 785.9
Financial Expenses 223.5 245.7 221.1
PBT 977.6 1109.8 2020.8
Provision for Tax 33 222 404.2
PAT before JV/ Assoc. income 944.6 887.8 1616.6
JV/ Assoc. income 979.5 1719.4 2598.4
Minority Interest -122.8 -122.8 -122.8
Adjusted PAT 2047 2607.2 4215.1
Shares Outstanding 1712 1712 1712
EPS 1.2 1.5 2.5
Source: KRChoksey Research

Consolidated Balance Sheet (INR Mn) FY16 FY17E FY18E

Cash & bank 1677 1480 786
Current Investments 0 28 28
Debtors 5375 6100 5955
Inventory 4065 5078 4537
Loans & advances 6592 7358 10351
Other current assets 1338 1361 1361
Total current assets 19047 21404 23019
Investments 5145 5187 5187
Gross fixed assets 5713 6065 6365
Less: Accumulated Depreciation 4568 4404 4784
Add: Capital WIP 70 192 192
Net fixed assets 1215 1853 1773
Deferred tax assets 79 63 63
Intangible Assets 18749 18787 18787
Long Term Loans & Advance 3120 4008 4008
Adjustments 2347
Total non-current assets 28308 29899 32166
Total assets 47355 51303 55185
Creditors 5048 6840 7941
Short Term Borrowings 3270 4211 4211
Short Term Provisions 423 51 51
Other current liabilities 2199 2240 2580
Total current liabilities 10940 13342 14783
Long Term Borrowings 1464 1016 1016
Long Term Provisions 245 312 312
Total non-current liabilities 1709 1327 1327
Total liabilities 12649 14669 16110
Paid-up capital 3429 3429 3429
Reserves & surplus 31050 33045 35646
Shareholders' equity 34478 36474 39075
Minority Interest 227 160 0
Total shareholders' equity 34706 36634 39075
Total equity & liabilities 47355 51303 55185
Source: KRChoksey Research

27 KRChoksey - Institutional Research

TV18 Broadcast Ltd.

Cash Flow Statement

Particulars (INR Mn) FY16 FY17E FY18E
PBT 1,987 1,267 2,164
Share of Profit of JVs (42) (1,587) (2,481)
Minority Interest (126) (160) -
Non-Cash Items
Depreciation 505 380 399
Interest Paid 472 224 224
Other Income (438) (707) (891)
Others 451
Operating Profit before Working Capital Changes 2,934 (583) (586)
Changes in Current Assets (1,542) (2,849) (2,146)
Changes in Current Liabilities 2,402 1,441 1,980
Changes in Inventory (1,013) 540 (450)
Cash Flow From Operations 2,782 (1,451) (1,201)
Income tax paid (1,367) (253) (433)
Net Cash Flow From Operations 1,415 (1,704) (1,634)
Cash flow from Investing Activities
(Inc)/Dec in Fixed Assets (995) (680) (699)
(Inc)/Dec in Capital Work In Progress (122) - -
(Inc)/Dec in Investment (Strategic) (43) - -
Non Operating Income Income 438 707 891
Share of Profit of JVs 42 1,587 2,481
Others (183)
Net Cash Flow from/(used in) Investing Activities (863) 1,614 2,673
Cash Flow from Financing Activities
Inc/(Dec) in Total Loans 445 - -
Inc/(Dec) in Preference Share Capital - - -
Inc/(Dec) in Equity - - -
Dividend Paid
Tax Paid on Dividend
Interest Paid (472) (224) (224)
Others (38) - -
Adjustments (685) (380) (399)
Net Cash Flow from Financing Activities (749) (604) (622)
Opening Cash Balance 1,677 1,480 786
Closing Cash Balance 1,479 786 1,203
Source: KRChoksey Research

Ratio Analysis:
Ratio Analysis FY16 FY17E FY18E
EBITDA Margin 10.0% 11.2% 15.6%
PAT Margin 19.5% 25.1% 34.7%
P/E Ratio 32.3 25.4 15.7
P/BV 1.8 1.7 1.5
EV/EBITDA 66.9 61.2 37.6
Market Cap/Sales 6.3 6.4 5.4
ROE (%) 5.6% 6.7% 9.7%
ROCE (%) 1.9% 2.0% 3.4%
Source: KRChoksey Research

28 KRChoksey - Institutional Research

TV18 Broadcast Ltd.


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Corporate Office:
ABHISHEK, 5th Floor, Link Road, Andheri (W), Mumbai 400 053.
Phone: 91-22-6696 5555; Fax: 91-22-6691 9576.

29 KRChoksey - Institutional Research