TV Today- Value Migration

Why TV Today

  1. Its a debt free company
  2. The management is good and credible.
  3. Leading Hindi News Channels AAJ Tak. On facebook itself this channel has 8.2 Million followers. The channel claims it has a reach of 30 Million
  4. With Rajdeep Sardesai and Karan Thapar joining the reach of the english news channel should also grow.
  5. The company has been steadily increasing the sales and the profit growth has improved significantly.

With Digitization ,AD rate will continue to grow India. Having a leading news channel is moat that this company enjoy and it is difficult for a news channel to overtake. At 1000 Cr Mcap this company is fairly valued and in 3-4 Years span i see this company easily commanding 5000- 6000 Cr MCAP if it can sustain its profit growth.

Something that i have not been able to comprehend is the signification variations in the profit margin from one quarter to another quarter. Would like to know your opinions or thought on this stock based on your research.


Karthik Kamath

TV TODAY is an operating leverage play wherein if topline increases by 10
%, increase in topline will flow to PBT. with full digitisation expected by 31 march 2017 its rich operational leverage which is its moat will come in handy.
aaj tak is a leader with 6 cr. viewership and brand value in excess of hero, airtel, icici bank. And tv today (headlines today) emerged this week at top of news channnel in BARC’s ratings.
4th quarter results took a beating on back of coming of karan thapar, shekhar gupta, sachin tendulkar hefty packages.
With low advertising rates for aaj tak and headlines today which will go only north in coming years coupled with operating leverage can do wonders.
i am inviting all to please share your views at this could be a big story building in media space going forward.

i am invested here for last one year. One question that i am unable to find answer is with so may news channels especially hindi ones (though most are bleeding financially) can it have pricing power which is evident from 4th quarter results where numbers took beating on account of biggies coming in. Is this can be the case of expanding too much on business just to remain on top.

Specially aaj tak news is very biased towards BJP. I suspect politicians might hold huge shares or atleast great influence.

As a news channel i think people are shifting towards better channels and trend should continue in future.

Ad rates are cheaper for a reason. Please consider it before fresh investments.

can u share the reasons in your mind for cheaper ad rates

Also during election years / seasons, news channels tend to depict high trps leading to higher revenue growth. I would suggest a deeper look at quarters subsequent to the Q1 FY15 to estimate/project revenue growth going forward.

Did some research about a year back and I had the following inputs (on the sector) from few friends working in this space. Please note that the data / views are old and might not be relevant today.

  1. Print is here to stay for atleast cpl of decades

a. The delivery model in India as compared to news stand model abroad is also giving it longevity

  1. Digitisation benefits have not fully accrued to the broadcasters  - some kind of sampling is happening where some of the leaders have lost share – this is a phenomenon when new channels are introduced / available – where ppl keep switching channels but ultimately select one or two 
  2. HT is doing well – largely owing to expansion in tier two cities – breaking the threshold of the

jagrans of the world. But times is also launching editions in these places

  1. Radio – the market will take off when license fees are reduced – new york has 50 fm stations

whereas mumbai has hardly 10. When license costs are reduced, multiple people spring up catering to various genres – you will have a channel dedicated to classical, another to rock – and the overall pie expands. Kicker could be when news and sports categories are allowed.

  1. Regd TV Today

a. supposed to be accruing benefits of certain strategic changes – news gathering has been separated from news broadcasting. They usually employee people who are bilingual and have managed to save substantial costs

b. Previously HT used to be sold along with Aaj Tak at subsidized rates, however now a separate sales
team is in place and managed to get a decent premium for the channel

c. However might have lost share post digitization

d. Governance is good

  1. M&A upside – while it is not expensive to run a news channel – players might be willing to

pay a premium for market share

Hi all,

I had researched this stock some time back and a lot of points mentioned here are on the money. However, there was just one deal-breaker for me, which didn’t allow me to buy the stock - the 12-minute add rule imposed by TRAI.

The matter is in the courts now (The last hearing was supposed to be on 21st January, 2015 but I am not sure of it has happened as yet). The reason why this is critical (IMHO) is because a channel like Aaj Tak averages >16 minutes/hour and ads form >90% of their revenues. So if you restrict this to lets say 12 minutes /hour and there is some increase in ad rates (There is some pricing power in play here) => still means that there is a 15-20% decline in revenues. Operating leverage works in the reverse manner as well, and the bottomline is likely to be affected significantly. This takes away any benefits in revenue & profitability which digitization might have.

To my mind, till the time there is more clarity on this issue, its a difficult one. The company does tick most other parameters though.

Disc - Not invested.


Hello karan, as far as case is concerned this does cast a shadow on short term financials. but in industry where most other players are bleeding financially even now will spell death for them. Also, with advt. rates now 5000 rs. for 10 seconds on aaj tak and rs. 500 for tv today are bound to go north only with increasing subscription charges. rich operational leverage is moat here.

I have done a lot of work on this - I have spoken to about 5 industry experts including competitors, ex-exmployees, current employees and here is what I have gathered.

Aaj tak has quite a moat - case in point, they have been the leader for 11 years since 2003 and that calls for some staying power. Whether you like it or hate it, their rates are about 40% higher than india TV or ABP news. The issue is that because of the competitive intensity, they cannot increae their rates - so they will have a time correctin on their rates until their competitors come within striking distance - say 15-20% differential on this. So, the key to aaj tak will be to keep expanding the niche - like they have done with aaj tak dilli, aaj tak tez to keep the margin going.

On head lines today/india today tv , given the heavy duty anchors who have come in and the costs of cutting over from TRP to BARC (which ironically benefits both the hannels as it takes into consideration a rural sample set and hence pushes back channels like NDTV which are primarily urban), it will be a couple of quarters before ad rate hikes happen and yields go up. the good news is that the channel is No. 1 for the first time ahead of times now and if this persists, the yield diferential between them which is 5 x will narrow to about 3 x over a year.

Look at it as FCF, the stock is quite cheap at 8% FCF yield on FY 15 which can only improve from hereon.

Isssues that could play spoilsport are ;

  • aditya birla selling their stake in the holding company
  • radhakishan damani triming his stake from the current 8-10% odd (bought at 196/share) although I doubt if this will happen
  • last year, when the rally happened, reliance capital kept selling shares and this brought down the share price.
  • the usual risks associated with a news channel - any touchy content or gettting on the wrong side of I & B will have serious consequences. there is a rumour that the plannned FM channel stake has not been closed out because of the channel’s excessive rubbing on the wrong side of the powers that be.

I see this as a toll road for the north belt advertisers. given the demographic dividend there, this will be a prime beneficiary of the consumerism boom - the classic shovel play on UP/bihar/customers coming of age.


Jainaj - Point about operating leverage can work the other was round as well if the courts decide that the 12-minute cap stays. There is a mitigant in place here which is Arun Jaitley being against this cap. However, I’d prefer to wait till the issue is cleared - It’s a not-very-high-probability but very-high-impact event

Hi Karan, 12 min inventory ad cap is only for GECs right now and not for music and news channels. However even if the regulations comes, leaders have enough pricing power to maintain their revenue run rate. Zee is a clear example. Given aaj tak has a leadership position in Hindi news channels and with digitizations benefits to kick in in next couple of years, my personal view is they should be able to garner at least 1200crs from subscription revenue by end of fy18 (assumption : 160 digitized HH, aaj tak and headline today to given subscription revenue of one 6/7 per month). Also with rising penetration and subscriber they should be able to maintain their premium.

Hi kunal,
Can you please elaborate on your calculation of subscription revenue for all tv today channels and source please.

Hi Jainaj,
Aaj tak charges different subscription rates on a-la-carte from different distributors like from airtel Rs. 4/-, Videocon Rs. 12/- MSO like Hathway Rs. 8/-. I could not find Headlines today on a-la-carte on any of the distributors menu. So on a safer side i am assuming they would get Rs.6-7 (conservatively) for both the channels together if they are offered in a pack (Like Mega pack for Airtel SD) because these are long term contracts.

Subscription revenue would be = 160m HH subs * Rs6.5 per month * 12 months = Rs. 12480m


Disc: Invested tracking position

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Hi Kunal, Varadharajan Ragunathan
Aaj tak has the viewer base of 6.3 people. This is for sure but don’t know whether this translates in to households or people. Also it is expected to grow at CAGR of 15% for next 5 years. So your calculation is more on optimistic side. We need to dig more on this front. Request you to look in deep and through other sources.

Hi Jainaj,
Viewer base in case of Broadcasters has to be on HH basis atleast for now until viewers starts watching it on Mobile which IMHO is long time away :wink:

The number that you are quoting may be right but this small number is largely because of under-reporting of subscribers by the distributors. Thats where the entire game is for TV Today. Once the digitisation kicks in, Distributors cant under report the subscribers and hence subscription revenue will jump multifold. TV Today is more of Phase 2/3 or Tier 2/3/4 cities story. These are the cities where most of the Hindi news channels are being watched. Since these cities are not digitised hence the numbers of subscribers are understated. As aajtak is a leading Hindi News channel, it will be included in the base pack itself (considering its a must have channel just like Zee or Star in Hindi GEC)

160m HH subscribers numbers are CII PwC estimates by end of FY18.

The 12 min inventory ad-cap is only for GEC’s as of now. News channels and Music channels are not forced to follow this. Next hearing is in July first week (as stated by Sun TV’s management). However, Mr. Arun Jaitely is not in favor of ad cap. Just to give a background, GEC’s like Zee and Sun started implementing it in July-14 itself and full impact of it was seen in Dec quarter. Zee ad rates were adjusted accordingly and there was no impact on their ad revenues. So, this should not worry the leaders too much.

Hope this helps.


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thanks. you described it well and your point that ad revenues of zee were unaffected throws light. Considering all of this and taking in to account tv today which in barc ratings emerged on top this week means as shareholders we have a huge margin of safety here. Certainly could be added more at these levels. Your thoughts please

interesting discussion. i have doubts on moat considering that operating
leverage will kick in later.

How will internet disrupt this? Why do we think people will keep watching
news over TV and hence the ad rates? What happens to ad rates on TV if
audience gets more curated news?

I have been thinking on this, but can’t get a clear answer.


Ofcourse, now a days before evaluating anything first thing that should come in mind will it get distrubed by app based technology or internet. Here I have thought a lot about it but don’t see the possibility of same in forseeable future. Secondly when operating leverage starts kicking in, you won’t get the share with margin of safety. It will run ahead atleast by 6 months. See dish tv nothing worthwhile still reflected in results but its on its way.

Thanks Jainaj.

Operating leverage will kick in, but till how long will this kick remain is what i am trying to understand. if there are factors which can disrupt this then i would rethink on allocation to this.
While i agree there will be such factors in all businesses, on some we can predict better/have better foresight. where we can’t or there are too many factors i personally dont have ability to allocate to them. Refer to Occams Razor mental model.

PS- dont hold. studying it again. looking for answers :smile: