Shemaroo Entertainment


(Donald Francis) #251

For those invested/interested in understanding Shemaroo business better

https://en.wikipedia.org/wiki/Pen_India_Limited
Restructured and formed Popular Entertainment Network Limited (with brand name ‘PEN’) in the year 1992 and started dealing in copyrights of Hindi feature films viz. Video, Satellite and Doordarshan (DD).

PEN was the largest content provider of Hindi feature films to channels. In 1995, PEN created another landmark by telecasting Sholay 20 years after its theatrical release on Doordarshan and creating a record with the highest ever Television viewing ratings (76 TRPs) with approximately 7.5 crore revenues.

In 1996, Sony TV telecast Sholay to celebrate its 1st anniversary and gained No 1 position among satellite channels beating Zee TV for the first time.

Restructured once again in 2004 and soon became the exclusive agency to Zee TV for acquisitions of Hindi feature films for Zee Cinema and once again Zee regained its top slot beating Sony TV.

In order to understand Shemaroo’s Industry better, it is imperative we reach out to other aggregators like PEN India, Independent Content Producers, and Media Buyers. I am a bit occupied with family/relative issues for the past month, so will be good if some others (in Mumbai) can take the lead in establishing contacts - and doing some grounds-up work. Thanks


(sivakkri) #252

Ad spend trends relevant for this thread …first link has few charts on ad spends over last few years …
https://twitter.com/IveBeenHad/status/871176499969372161/photo/1
https://www.recode.net/2017/5/31/15693686/mary-meeker-kleiner-perkins-kpcb-slides-internet-trends-code-2017


(Rupesh Tatiya) #253

The DRHP of the company has following to say regarding “Direct Operational Expense (DOE)” ->

It seems that DOE includes a component of new inventory bought and that is why increase in inventory is deducted from expenses. Although this is not clear from description above, it seems so from the following description -

Regards,
Rupesh


(Donald Francis) #254

Thought of tracking the main customer segment of Sumeru - Hindi Movie Channels - Which are the Top Channels (that should be garnering the top advertising dollars) - how many are actually Sumeru Customers (we know Zee Cinema isn’t), and get onto library/re-issue content share subsequently.

Luckily weekly data from BARC is readily available. http://www.barcindia.co.in/statistic.aspx
While that may not reflect the actual monthly or annual data-points but surely this could be a start - to try and track and gauge better if Traditional Media (78-80% of Sumeru business) growth coming back soon is under threat/suspect - making ourselves better-informed - with the right questions to ask.

Views invited. Anyone with friends/contacts in the Media Industry, requested to pursue the best ways to get a real grounds-up handle on tracking traditional media growth coming back - that remains probably the only real key risk!


(sachit) #255

Excellent point to consider. In additional to the same, I also compared the weekly impression of Hindi GEC to weekly impression of Hindi movies - both appeared almost the same. Although the number of Hindi GEC channels are much higher than Hindi movie channels.

At the risk of sounding sexist without any intention to do so, I think Hindi movie channels attract a broader genre of audience: men, women and children, compared to Hindi GEC which attract more women than the other segments (this is completely a general assumption with no data back up and rebuttal to the same is welcome). So I would argue that Hindi movie channels are more diversified in their audience breakup. This is compensated by the fact that it is mostly women who take common household spending decisions and may be more of a focus for advertisers.

In additional I also feel that as a movie tends to be longer - 2.5 to 3 hours compared to GEC shows 25-30 minutes - the chances of getting a higher weekly impression figure are perennially more as if a good/reasonable movie is coming, some people might start watching from the beginning while others might watch towards the end. This is again compensated by the fact that 4 different shows of GEC can replace a movie and hence its like getting four bullets for target practice in a 200 m range than 1 in a 50 m range.

Lastly I also feel that for GEC channels, the broadcasters are taking a gamble - developing new shows to consistently maintain market share. Its similar to the risk movie producers take when they develop new films. So for them also movie business is a ‘less risk business’ due to perhaps higher predictability.

These are all general observations with no clear win/lose analysis but I do feel that movies will remain a core part of the broadcasters business and it should continue to grow (traditional / non-traditional notwithstanding)


(Donald Francis) #256

There are data-points on this. The reach Hindi Movie channels deliver is higher but the genre has remained under-monetised with much lower effective advertising rates- for a reason - The increased reach only shows that more people are sampling these movie channels, but this audience is fickle. The moment an ad appears, the viewer’s chance of changing the channel is higher, thus lower ER. But with better BARC data - especially from rural India - these rates may be going up slowly, media planners opine.
http://www.dentsuaegisnetwork.in/interview-aug-23-2016.php

“Hindi movie genre has gained under BARC,” Neeraj Vyas, business head of movie and music channels at Sony Pictures Networks India (SPN), said. “The combined reach of top five movie channels will be higher than combined reach of top 10 Hindi GECs.”

Hindi movie genre players have been complaining for long that the genre has remained under-monetised as the effective advertising rates or ER for the genre, have been much lower compared to that of the Hindi GECs. “We have been delivering decent reach, but it is always the Hindi GECs which take the lion’s share in the ad dollars,” a top executive in another Hindi movie channel said on condition of anonymity. He added that time spent, and thus viewership, is lower compared to GECs; the rates, he claimed are disproportionately lower.

But advertisers and agencies say this is because the content on movie channels is not original. “The increased reach only shows that more people are sampling these movie channels and that this audience is fickle. The moment an ad appears, the viewer’s chance of changing the channel is higher, thus lower ER,” a media buyer said. Vyas, however, is of the view that the time has come for the advertisers to see the reach and increase the ad rates. Overall too, weekly time spent on paid Hindi movie channels is 257 minutes per week, compared to 388 minutes per week of the Hindi GECs.

“Advertisers chase eyeballs and finally, money will follow the eyeballs. We are getting a better view on what India watches, but for another year or two, it will remain like this. I don’t think any client will take sudden decisions,” said Ashish Bhasin, chairman, Dentsu Aegis Network - South Asia.


(Lav) #257

Amazon USA has recently (at least I heard of it recently) started marketing “amazon.com/heera” . It is an add on package to amazon prime. For $4.99/month on top of amazon prime fees, you get access to some 579 Indian movies (as of June 19th 2017). Out of the 579, 254 are Bollywood movies. And rest are regional movies like Telugu, Tamil, Bengali, Marathi, etc. I had a quick look (10-15 mins) through the list of movies, and I do not see any of the movies that Shemaroo owns the rights to; on this amazon list (I was hoping to see a few at least).

If Shemaroo can figure out a way to work with Amazon &/or Netflix, the potential gains for Shemaroo can be big; considering the reach of Amazon & Netflix throughout the world wherever Indian population is present.


(Dhiraj Dave) #258

Find enclosed link of Cisco Study on growth in VNI Forecast for India.
http://www.cisco.com/c/m/en_us/solutions/service-provider/vni-forecast-highlights.html#

What I found relevant for Shemaroo being projection of growth in Internet video section:

In India, Internet video traffic will grow 5-fold from 2016 to 2021, a compound annual growth rate of 40%.

In India, Internet video traffic will reach 3.6 Exabytes per month in 2021, up from 657 Petabytes per month in 2016.

In India, total Internet video traffic (business and consumer, combined) will be 76% of all Internet traffic in 2021, up from 57% in 2016.

In India, Ultra HD will be 10.0% of Internet video traffic in 2021, up from 0.7% in 2016 (140.9% CAGR).

In India, HD will be 51.4% of Internet video traffic in 2021, up from 12.0% in 2016 (87.9% CAGR).

In India, SD will be 38.6% of Internet video traffic in 2021, compared to 87.4% in 2016 (19.2% CAGR).

In India, consumer Internet video traffic will be 77% of consumer Internet traffic in 2021, up from 58% in 2016.

In India, business Internet video traffic will be 72% of business Internet traffic in 2021, up from 50% in 2016.

In India, Internet-Video-to-TV traffic will be 23% of fixed consumer Internet video traffic in 2021, up from 15% in 2016.

In India, Internet-Video-to-TV traffic will increase 6-fold between 2016 and 2021 (43.8% CAGR).

In India, 84 billion minutes (159,201 years) of video content will cross the Internet each month in 2021. That’s 31,840 minutes of video streamed or downloaded every second.

In India, 50% of all Internet video traffic will cross content delivery networks in 2021, up from 31% in 2016.

In India, 58.4% of all Internet video traffic will be long-form video (including live) in 2021, up from 59.4% in 2016.


(Furkan Alam) #259

Very good move by Shemaroo management. Makes them more efficient. Giving them much better control and access to their huge content. Surely will help them in their digital foray.


(Furkan Alam) #260

(Dhiraj Dave) #261

Interesting news about Shemaroo management view for setting up own OTT


(Dhiraj Dave) #262

Reliance Industries getting private placement of less than 25% stake valued at Rs 413 Cr (Total market cap around Rs 1660 Cr) in Balaji Telefilms Limited. Interesting development in the sector.
http://www.bseindia.com/xml-data/corpfiling/AttachLive/867e5976-702d-4ef0-b83c-d1f03ba996c8.pdf


(Rupesh Tatiya) #263

Quite a few people seem to have very negative perception of media industry and I was trying to find out why that is the case. Then I came across following excellent article which has been posted by @diffsoft in Eros thread.

I wanted to take findings of this article and try to apply them to Shemaroo. Following are some notes ->

Aggressive Accounting
As per ASC 926, the film cost should be amortized in the same ratio as current revenue/expected final revenue. Also if there is negative change in expected revenue, write down shall happen.

Eros amortized 50% of the cost in the first year of release for high budget films and 40% of the cost for medium and low budget films. The rest of the costs are amortized over nine year period. Due to such aggressive accounting, Eros was consistently overstating the operating profits. Also Eros probably did not take the write off for flop films like Shamitabh, Tevar etc.

Shemaroo’s accounting policies have been mentioned in this thread. I feel that the accounting policy of Shemaroo is decent. They also take the write-off of entire amount if they are unable to sell the content in 18 months. I would like Shemaroo to go even more conservative in the accounting - especially in digital rights for both aggregated and long term rights.

High Receivables, Subsidiary Financials
Eros’s trade receivables had increased from 14-15. Also Eros’s subsidiaries had very high levels of trade receivables and they increased rapidly. For one subsidiary, trade receivables exceeded the total revenue booked. There has been aggressive revenue growth reported from non-core locations like UAE, Singapore for Eros.

Following are the trade receivable figures for Shemaroo ->

The receivable have fluctuated widely and on average more than third of revenue ends up in receivables.

Shemaroo has following important subsidiaries ->

  • Shemaroo Entertainment, USA
  • Shemaroo Entertainment, UK
  • Shemaroo Films

Following table provides trade receivables for company at both standalone and consolidated levels.

As it can be seen above, there is no difference at all between standalone and consolidated levels. Subsidiaries receivable levels are not an issue.

Related Party Transactions and Family
Eros has many family members as KMPs and there salaries grew at aggressive rates, from 5mn$ in FY13 to 23mn$ in FY15. Furthermore, Eros purchased 10% of films from a related party (NextGen films) and these films have been failure. Further Eros sold film rights to another related party (Drishti Creations) which was 10%+ of its total revenue. Further Drishti reported less revenue than what Eros reported sales.

Shemaroo also has many family members working in the company. Following table from DRHP shows relations ->

Further there are more related people listed below ->
Ketan Maru, Head, Film Production

  • Associated with group since 1986

Smita Maroo, Head, Animation Division

  • Associated with group since 2003

Harakchand Gada, Head, Accounts Division

  • Associated with group since 1987

Mansi Maroo, Co-producer, Film Division

  • Associated with group since 2005
  • Daughter of Raman Maroo

Kranti Gada, Assistant VP, New Media & Technologies

The salaries are not alarmingly high.
Please note that, relatives of family at KMP position in renting business like Shemaroo is an ignorable for me.

Digital Business Numbers
Eros created a lot of hype for its digital business which was not matched by revenues on the book. Also there seems to be some exaggeration of subscriber numbers in the numbers reported by Eros. Also the number of movies reported by management vs. those available on various portals did not add up.

I haven’t done any work in verifying the number of titles reported by Shermaroo vs. those available on YouTube or other portals. For subscriber numbers, @dd1474 has done some work and they look okay.

One interesting thing that came out of the link is following paragraph (in FY14) ->

There was an issue where the delivery mechanism costed 500Rs. per GB whereas content delivered was only costing 10Rs. I would say that this imbalance has been largely corrected after JIO entered the market. JIO’s entry might cause the content consumption to go up over digital platforms consistently.

I am not very good at accounting and using triangulations. Views are invited (for/against/inaccuracies) etc.

Disc - I am invested in the company and it forms more than 5% of my portfolio. This is not a buy or sell recommendation. Investors are kindly advised to do their own due diligence. I am not a SEBI registered analyst.


(sayampokharna) #264

My write-up on Shemaroo Entertainment Ltd.
https://drive.google.com/file/d/0B_FtUn6iQZYjbGwtRVAxUzZIZkU/view?usp=sharing


(Sunil) #265

When is shemaroo result?


(narendra) #266

(Vikas Kasturi) #267

Here is the 2017 KPMG report on Indian Media & Entertainment industry. https://assets.kpmg.com/content/dam/kpmg/in/pdf/2017/04/FICCI-Frames-2017.pdf


(ajaychauhan) #268

Today heard concall of sun tv network, wherein they mentioned that there was a slowdown in the advertisement revenue due to GST during the month of June and July, however they mentioned that there is a recovery in August month. This comment from a reputed broadcaster in south seems to indicate that we might see another weak quarter from Shemaroo, feeling nervous here due to stretched balance sheet of shemaroo,

Invested


(Vijay Gattani) #269

I hope there is no negative surprise from Shemaroo in this quarter, results already delayed beyond SEBI stipulated timelines.


(Amit Aggarwal) #270

Below is what I received today from Shemaroo Investor Relations:

Dear Sir,

_ _

In reference to your below e-mail, we wish to inform that IND AS would be applicable to the Company from Financial Year 2017-18 and SEBI Circular No. CIR/CFD/FAC/62/2016 dated July 05, 2016 has provided the relaxations for submitting financial results for the quarter ending June 30, 2017 and September 30, 2017.

_ _

Accordingly, the Board meeting of the Company for considering unaudited financial results for the Quarter ended June 30, 2017 will be held on or before September 14, 2017 and date of meeting shall be announced in due course.