Financial Daily from THE HINDU group of publications
Wednesday, Dec 17, 2003
Financial Daily from THE HINDU group of publications Wednesday, Dec 17, 2003 |
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Corporate
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IPOs TV Today IPO at Rs 80-95 price band Our Bureau
Mr Aroon Purie, Chairman & Managing Director, TV Today Network, and Mr Nimesh Kampani, Chairman, JM Morgan Stanley, at a press conference in Mumbai on Tuesday. - - Paul Noronha
Mumbai , Dec. 16 SUBSCRIPTION revenue could be a reality for free to air channels, according to Mr G. Krishnan, Executive Director and CEO, TV Today Network Ltd. As conditional access systems and direct to home platforms become a reality, free to air channels would move to pay mode, Mr Krishnan said. "Channels would have to move from a complete advertising revenue model to a combination of advertising and subscription when declarations improve,'' he said. TV Today, which runs two channels - Aaj Tak and Headlines Today - would be comfortable with a 70:30 advertising subscription ratio. Pay revenue is expected to be very critical source for the broadcast industry in time to come, industry analysts said. An industry that is growing exponentially is expected to witness big jumps in advertising spends as well as subscription revenue. Advertising revenue is estimated to grow to Rs 5,500 crore in 2007 from Rs 3,500 crore in 2002 and subscription revenue is slated to move up to Rs 7,200 crore by 2007 from Rs 800 crore. Cable and satellite homes, currently at 45 million, are estimated to go up to 65 million homes by 2007. TV Today, which is entering the capital market with its initial public offering, is planning to set up a bouquet of channels but officials declined from giving any further details. The issue of 1,45,00,000 equity shares of Rs 5 each is being made through a 100 per cent book building process. The price band has been fixed at Rs 80-95 per share. The proceeds of the issue will be used for upgrading the infrastructure of its existing news channels over the next two years. TV Today had reported a revenue of Rs 108.5 crore for the year ended March 2003 as compared to Rs 51.7 crore in the earlier year. Ebidta rose to Rs 54.4 crore from Rs 15.1 crore in the same period. According to Mr Anil Mehra, Director, TV Today, the company has become totally debt free after July 2003. Profit after tax for the year ended March 2003 was Rs 26 crore. News channels, according to him, have much better margins in comparison to other channels because there is not much variable costs. "If there are no expansion plans, margins can be very high,'' he said adding that such a scenario would become possible some years down the line. However, as of now TV Today is mainly dependent on Aaj Tak for its revenues and the company does not deny the fact that it faces significant competition from existing news channels and newer entrants into the industry. Mr Krishnan did admit that the advertising revenue from an English channel is much lower than Hindi news channels. However, there are plans to revamp Headlines Today. The company would consider bringing Thomson Press into its fold sometime in the future, Mr Aroon Purie, Chairman & Managing Director, TV Today Network.
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