The stock price of Kalanithi Maran-owned Sun Television Network (Sun TV) was down 4.88 per cent to Rs 376.10 in the morning hours of Friday, as the election results in Tamil Nadu started coming in. On the other hand, share price of one of Sun TV's main rival, Raj TV, went up 19.92 per cent.
Industry observers said this initial reaction of the markets reflected the fears that the business of Sun TV might be impacted, especially cable TV distribution, which alone is estimated to be around Rs 1,000 crore. J Jayalalitha- led AIADMK had promised in its 2011 election manifesto that it would abolish the monopoly of cable television in the state.
Maran-owned Sun TV operates Sumangali Cable Vision (SCV). The group's interest include media (television, newspaper, and FM), movie production and the recently entered aviation business with the acquisition of a majority stake in SpiceJet.
As on March 2006, the networth of Sun TV Network was Rs 309.90 crore, which rose to Rs 1,218.95 crore in 2007, Rs 1,470.67 crore in 2008, Rs 1,792.51 crore in 2009 and Rs 2,015.01 crore in 2010. Total income increased 31 per cent to Rs 1,437.5 crore as on March 31, 2010, from Rs 1,091.5 crore. Profit after tax was at Rs 567.3 crore (Rs 437.1 crore).
How SCV helps the group
SCV, an MSO (multiple system operator) offering services on the conditional access system (CAS), has partnered with almost all the leading national and international channels. It has a 65 per cent market share. Its recent agreement was with Network18 Group to broadcast the group's 33 channel.
A major source of income for Sun TV is through advertisements, which come from the company-owned 20 satellite television channels across four languages -- Tamil, Telugu, Kannada and Malayalam.
Sun TV-owned channel rates are almost eight times higher than its immediate competitor as the channel claims to have more viewership. Other channels include Jayalalitha-run Jaya TV and Raj TV. While Sun TV's advertisement rates for 10 seconds during prime time is around Rs 42,500, for others it ranges from Rs 1,500 to Rs 5,000.
According to industry sources, the state currently has around 16.5 million households having cable and satellite connections, of which 4 million have DTH leaving 12.5 million for cable connections, of which another less 10 per cent don’t have either power connection or TVs or still have stick to Doordarshan DTH.
It is estimated that a household pays Rs 100 a month towards subscription charges. This shows the industry is estimated is to be around Rs 1,400-1500 crore, of which 65 per cent of SCV's revenue estimated to be around Rs 950-1,000 crore.
The group had only one rival – Rajan Raheja-owned multi-service cable operator Hathway Services, -- which stopped its service in 2009 stating SCV had virtually entered all Hathway markets leaving the MSO operator with no choice but to close operations.
The DMK started Arasu Cable, (meaning government) as a result of the fallout between the Maran brothers and his uncle chief minister Karunanidhi's family. However, with the Maran brothers patching up with the first family, the network did not kick off.
| Correction |
| Sun TV Network and Sumangali Cable Vision (SCV) have clarified that neither of them is in any way connected with the cable television monopoly in Tamil Nadu as referred to in the report. Sun TV Network has stated that the BS report’s estimate that the company’s total income increased 31 per cent to Rs 1,437 crore as on March 31, 2010 from Rs 1,091.5 crore is wrong. Further, the information that the company’s profit after tax was Rs 567.3 crore in 2009-10, compared to Rs 437.1 crore in the previous year, is factually inaccurate. Sun TV Network has also denied that it owns any cable TV business, adding that Sun TV Network and SCV are two different entities, which are managed by two different persons. The company’s statement also describes as incorrect the BS report’s observation that the advertisement rates are Rs 42,500 for 10 seconds during prime time and Rs 1,500-5,000 for other time slots on the Sun TV Network. In a separate statement, SCV has clarified that the company’s subscription revenue share of the cable market is not 65 per cent, as wrongly stated in the BS report. Also, the annual revenue estimate of Rs 1,000 crore, as mentioned in the report, is wrong. The company has stated that its total revenue is not even Rs 20 crore. Moreover, the statement says that the BS report is factually incorrect in mentioning that SCV entered into all the markets serviced by Hathway, a multi-service operator, leaving the latter with no options but to close its operations. We stand corrected and regret the errors in our report. |
