Analyst positive on performance of IBN18

Rohit Mathur - Televisionpoint.com | Mumbai
IBN18 Broadcast Ltd has under performed the broader markets in the last one month, falling 2.6 per cent against a 2 per cent rise in the BSE Sensex. The analyst community, however, is positive on the stock, which currently trades at Rs 105.70 per share.

The company is a subsidiary of Network18 and hosts news channels. It has recently completed acquisition of 50 per cent stake in Viacom18 after taking over Television Eighteen India's 15.47 per cent remaining stake in Viacom18.

Post this acquisition; IBN18 has become a 50 per cent shareholder in channels like MTV, Nickelodeon, VH1 and Colors, which have bright prospects. It also operates two channels of its own - IBN7 (Hindi news channel) and CNN-IBN (English news channel); and is a 50 per cent partner in the Marathi news channel IBN Lokmat.

Colors, a Hindi general entertainment channel, has become the second-most viewed channel after Star Plus. In FY 2010, shows like Balika Vadhu, Jai Shri Krishna and the second season of Khatron Ke Khiladi and Big Boss are expected to maintain viewership ratings going forward. It hopes to earn Rs 500 crore through advertising revenues.

On the flip side, the channels profitability is likely to be restricted in the near term on account of the sub-optimal distribution deal IBN18 entered into with One Alliance, fetching Rs 300 crore for 3 years. IBN18's subscription revenues would be helped by growth in DTH platforms and mandatory conditional access in 55 cities by 2011.

Music channel MTV enjoys the top two position in the category and Nickelodeon is among the top few cartoon channels. This too should boost advertising revenues. However, analysts maintain that IBN7 and IBN Lokmat are facing stiff competition and are yet to enjoy similar levels of success as the groups other channels.

For the June quarter, IBN18 reported an operating profit of Rs 5.27 crore against an operating loss of Rs 4.53 crore in the same period last year. Election spends by various parties led to better advertisement revenues. Analysts expect Colors to break even in the next few years. Investors could accumulate the stock on declines.