Why analysts are cautious on Maran’s Sun TV despite good prospects

FP Editors Sep 18, 2013

Controversy never dies down for Kalanithi Maran’s Sun TV group.

Just when the group is slowly getting out of the woods after the CBI probe and the onslaught of Tamil Nadu Chief Minister Jayalalitha, analysts have raised new concerns about the company’s functioning.

According to a report in the Economic Times today, Kotak Institutional Equities has pointed out that the group’s aircraft buying and selling is worrying. “Non-business isuues remain an overhang on Sun TV stock and force continued caution,” the brokerage has been quoted as saying in the report.

The ET report says in five years Sun TV bought three aircraft and sold two. The latest was in 2013, when it sold an aircraft for Rs 190 crore and spent Rs 295 crore for a replacement, it said.

 The plane the company sold was only three years old.

Kotak has said that the old aircraft was sold due to operational concerns. “It remains unclear why an informed buyer would pay Rs 190 crore “equal to net block, nil loss on sale) for such an asset,” the ET report quotes Kotak research note.

The note also says the company has robust free cash flows of Rs 465 crore.

Motilal Oswal also had raised similar concerns, the ET report notes.

“When a life of an aircraft is 15 years, why would you buy and sell aircraft in a short span of time?” Amit Tandon of Investor Advisory Services has been quoted as saying in the report.

Meanwhile, another report in the VC Circle has said that Maran and his wife Kavery have emerged the highest paid executives in the country in FY13. Both of them took home a cool Rs 112.5 crore as salaries during the year, when their companies were not doing  great. However, the amount was marginally lower than their remuneration a year ago.

A Mint report notes that the average salaries of directors of top 500 companies in 2012-13 rose more than 25 percent while the profits fell 1.6 percent and debt rose about 17 percent.

Sun TV eyeing TV9 channels in Rs 150-cr buy

BL :Ravikumar :CHENNAI, JULY 15: 2013 

The Kalanithi Maran-controlled Sun TV Network Ltd is close to acquiring Hyderabad-based Associated Broadcasting Company Pvt Ltd (ABCL), which manages a chain of regional news channels under the brand TV9.

ABCL has six news channels — one in Telugu, two in Kannada, and one each in Gujarati, Marathi and English. According to sources, the Mauritius-based private equity firm Saif Partners has substantial stake in the company, and is looking to exit.

“The deal may be struck for approximately Rs 150 crore,” a person close to the development toldBusiness Line.

TV9 is the market leader in the news genre in Andhra Pradesh and Karnataka, with a considerable lead over other news channels.

TO SUN’S ADVANTAGE

Sun Network, with a Rs 16,000-crore market capitalisation, has a strong presence in the South with 32 channels across all genres in the four regional languages. 

While its Tamil bouquet is the market leader by a wide margin, its lead in Andhra Pradesh and Karnataka is more modest. In Kerala, it trails Asianet.

According to an industry analyst, if the TV9 deal goes through, Sun TV’s market share in the news genre will get an immediate boost.

It could also lead to a consolidationin the South as smaller players with low TRP shares are in danger of losing out when the TRAI-mandated cap on advertising comes into effect, in October.

ADVERTISING CAP

Post the October cut-off date, no broadcaster can air commercials in excess of 12 minutes in an hour. 

Analysts believe that stronger players such as Zee and Sun will be able to transition to the new dispensation with little disruption by raising rates to compensate for the volume lost whereas smaller channels may take a hit as their ability to raise prices may be limited.

On an earlier occasion, the Sun Group CFO, SL. Narayanan, had said in an interview to Business Linethat the Sun group “was not averse to an M&A-led growth strategy, if the numbers make sense.” However, when contacted, he declined to comment on a possible deal with TV9. In an emailed response, he said: “It is pure speculation at this time.”

Sun TV Network Ltd is a debt-free company and has Rs 416 crore in cash and cash equivalent as of March 31, 2013.

ravikumar.r@thehindu.co.in

(This article was published on July 15, 2013)

SUNTV posts Rs 567 cr net profit for FY10

Source :Press Trust of India / Chennai May 28, 2010, 14:05 IST
The Sun Television network today said net profit rose by 29.8 per cent to Rs 567.38 crore for the financial year ended March 31, 2010, in comparison to the previous year.

For the year ended March 31, 2009, the company reported a PAT of Rs 437.11 crore, Sun TV Network said in a filing to the Bombay Stock Exchange.

Total income for the year ended March 31, 2010, grew by 31.70 per cent to Rs 1,437.52 crore in comparison to Rs 1,091.52 crore in the previous year.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for FY'10 grew by 43.93 per cent to Rs 1,110.55 crore from Rs 771.59 crore in the previous year.

The board of directors have declared a final dividend, including an interim dividend, of 150 per cent, which amounts to Rs 7.50 per equity share of Rs 5 face value, for the fiscal ended March 31, 2010.