Media stocks enter prime time

FII investment, revenue sharing regime for FM channels add sheen to the sector

Media sector stocks hogged the limelight on renewed buying interest after the government allowed FDI/ FII investment upto 20 per cent in private FM radio firms. Smart gains in the stocks of private FM players such as Mid-Day Multimedia and TV Today rubbed off on the entire media stocks.

Mid-Day Multimedia (which operates GO 92.5 FM station) appreciated 14.21 per cent to close at Rs 72.75, while TV Today (93.5 Red FM) gained 9.41 per cent to close at Rs 81.84 on back of impressive volumes.

Media sector analysts welcomed the latest government announcement. They said, "Allowing FDI and FII will attract many foreign players to invest in Indian radio companies."

Media firms operating FM stations have bled heavily in the last few years because of the exorbitantly high license fee.

"FII investment in radio has already been witnessed. Recently a private equity investor GW Caps picked up 75 per cent stake in Radio City.

A media analyst with a domestic broking firm said, "Media sector stocks are back in the limelight thanks to some positive announcement by the government."

Earlier this month, the government allowed foreign institutional investors (FIIs) to invest in the TV news broadcasting segment. Previously, only foreign direct investment (FDI) up to 26 per cent was allowed, while the FIIs were not allowed to pick up stake in any TV news broadcasting company.

News broadcasting major NDTV was up 6.77 per cent to Rs 227.10, Adlabs Films was up 20 per cent to Rs 240.60, Deccan Chronicle Holdings was up 7.23 per cent to Rs 203.25, Balaji Telefilms was up 3.67 per cent to Rs 107.35, Pritish Nandy Communication gained 1.64 per cent to Rs 68.15, K Sera Sera Productions gained 1.63 per cent to Rs 84.30 and Zee Telefilms was up 1.5 per cent to Rs 155.60.

Reliance Capital has decided to up its stake in Adlabs to 51 per cent and will invest Rs 350 crore. The group will also make an open offer for 20 per cent public holding. Reliance group already holds 6 per cent stake in Adlabs.

Abraham Thomas, chief operating officer, Red FM, said, "While we are awaiting the details of the government announcement, one would now see significant changes in the areas of content, genre and demographics."

According to Thomas, private radio stations will now begin to play music for target audience and one can expect several new formats to be launched in the coming months.

Ambar Basu, vice-president, finance, Radio City, stated, "Multiple stations in cities will certainly help towards delivering more segment relevant programming to targeted audiences in local area."

Radio City has already stated its desire to expand to 25 cities. It has also appointed former chief executive officer of Zoom TV- Apurva Purohit as its CEO.

The government today, apart from allowing 20 per cent FDI/ FII investment in private FM radio channels, also announced a revenue sharing proposal, wherein the broadcasters would be sharing 4 per cent of their revenue with the government.

It also proposed that new players can operate more than one channel in any city. There will be a one-time entry fee for new players via the closed bidding process. The existing operators will be allowed to migrate to the revenue sharing arrangement.