now that the digitization has become a reality (at least in metros) it is right time to take a relook at this neglected sector
I think the content providers should benefit more that the content carriers (like dish/cable companies)
the logic being that the content carriers would have to invest more in new infrastructure like set top boxes and marketing etc where as content owners/makers would be able to milk thecustomerson this new platform by offering new products like pay per view etc without incurring any extra cost
Eros is one such companylanguishingat its 52 week lows though a lot ofpositiveishappeningfor the company in the backgroundenvironment
please see this anand rathi update for the latest ratios and projections
The numbers/valuations looks reasonable, but is there is some story not revealed by these numbers? why is this stock down by over 45% in last one year despite outstanding growth?
I think it is a great play on growing number of multiplexes. They get direct benefit of growing number of multiplexes without any additional capital investment. Structurally number of multiplexes are bound to grow. The business model is very conservative as they get 70% of cost before a movie is released through TV/overseas rights. The balance sheet shows 300 crores of bank balances against a total debt of 354 crores, leading to no issue of any type of debt payment.
The investor can wait for some of their movies to flop on box office, and add it a bit after every flop; as market will react disproportionately after bad news. I see it a good structural play on Indian demographics where- (1) Per capita expenditure on entertainment is likely to grow at a rate higher than per capita income growth (2) Growing number of multiplexes even in tier-2 & 3 towns (3) Direct content delivery to consumer through internet/3G/4G technology (4) Acceptance of Indian movies on world platform.
Is not Channel Companies(like Zee) will perform better than Content providers(like Balaji) as Channel companies need only one superhit show to increase subscription revenue …
I mean doesn’t matter whether channel has 1 popular show OR 10 popular shows, their subscription revenue is going to same …
(just theoretically…as not possible due to various investment factors) if u have 10 popular shows then start 10 different channels OR More practically all contents on channel should target only one of family members:)
A great thought about channels. I think the worst part is anybody can start a channel anytime leading to numerous divisions and subdivisions of subcription revenue. Further, what will happen if TV channels are available as radio channels due to some development of technology!! More so it is capital intensive.Content is protected through copyright. Thus more technological advancement on distribution technology (at capital cost of others) will result in higher value of content. The more competition in channel space, the more valuable content it. These are just my first thoughts- I need to think more.
I think one of the concerns regarding these companies is likely to be corporate governance and reporting of revenues and profits. It could be something similar to real estate accounting where a lot of figures could be hid and highlighted.
Its my uneducated guess that this “Pay per Channel” policy is likely consolidate TV industry as weaker channels will be thrown out and powerful channles will become more and more powerful … something like Sun TV(surprising observation about Sun TV is despite it being media moghul in Southern India, no known investment groups like LIC, HDFC, Reliance, Kotak, SBI, etc hold stake in it(more than 1%)
A great thought about channels. I think the worst part is anybody can start a channel anytime leading to numerous divisions and subdivisions of subcription revenue.
seems to be a good business to be in,however if you go through the thread in equitydesk ,there are serious issues on corporate governance and promoter integrity,maybe they continue making great movies and rake in money,but not sure as a minority shareholder.maybe that’s the overhang on the stock price.
Somebody has raised some issues related to mergers with a partnership company, bonus issues etc. when Eros International was not a public company!!! Some valid questions regarding transactions with related company have been raised, particularly with overseas rights. I am not sure if there are many buyers of overseas rights in pre-release phase. Indian satellite rights has been contracted with Viacom 18, not a related entity. Promoters hold 78% of the company- and hence not much scope of promoters buying shares. The insider sale is being referred to is sale of 5000 odd shares by some employee.
Till very recently Film Business was a murky business. The legacy will continue for some more time. But the business is changing and moving towards more transparency. We have to be careful to see how the management behaves.
if these are film rights then the co would be depreciating them over the years while the real value finishes within months. Shouldn’t they be treating them as inventory?
Their major capital expenditure is advances for content to various producers. The advance may be paid in one year, and content is released generally after one or two years. Hence they treat it as a capital expenditure and amortized over the years. The rate of amortization appears to be fair- in 2011-12 they had PBT of 172 crore, whereas amortization expenses are 316 crores. The new advances are 446 crores (things are more clear in cash flow statement). The issue has been explained in notes to the accounts.
Another issue is unpaid undisputed taxes in the balance sheet- like VAT/Service Tax. The industry pays entertainment taxes- how come VAT is applicable is not understood. Further Service Tax on what? These tax items are not “undisputed” in any case.
over 2 decades everybody is commenting on integrity of essel group(zee group) … but look at this … last week in one interview Manish Chokhani said that in 1992 he did IPO of ZEE(25 cr) and today mkt cap of zee is 28K cr
OR More practically all contents on channel should target only one of family members:)