The Hindu Business Line : Media stocks shrug off TRAI tariff order

Analysts tracking the sector argue that the impact of the announcement will be felt only next year when CAS will be implemented throughout the country.

Stocks of media companies such as Zee Telefilms (up by 4.64 per cent at Rs 287.75), NDTV (up by 0.44 per cent at Rs 195.85), SAB TV (up by 0.59 per cent at Rs 15.25) and Balaji Telefilms (up by 0.61 per cent at Rs 131.20) gained.

Short-term impact of the announcement failed to mirror on these stocks.

News channels

However, the stock of TV 18 has been taking a hit since the past two days. It closed at Rs 576.10, down by 3.96 per cent. According to analysts, revenues of news channels will be affected as their major reach is in metros where CAS is likely to be implemented initially. This effect will show on their stocks in the long run.

"Though immediate effect was felt yesterday, the stocks are now expected to stay rangebound till the announcement comes into effect. The long term impact will be tremendous and we expect almost 40 per cent revenue to be hit," said an analyst tracking media stocks.

Share prices of Sun TV (down by 0.44 per cent at Rs 1193.85) and Sahara One Media and Entertainment (down by 0.15 per cent at Rs 338.50) also witnessed a fall.

"The news is certainly negative for media companies. Channels like Zee have high content costs and their subscription revenue will feel the impact. They offer a wide gamut of channels," said a media analyst.

Analysts say that once CAS is fully operational in most metros, the financials of the media companies will alter and the current price of Rs 5 per pay channel will not be beneficial to these companies.