1

1 4

S E P 1 2

Media and Entertainment Track

Research4India Update on the Indian M&E Industry

In The Spotlight
Good times ahead for Distribution This fortnight infused a fresh life into Indian economy as well as Indian media sector, with the Government executing much delayed positive reforms. The Government has hiked FDI in DTH, Cable and other broadcasting services including mobile TV to 74% from existing 49%. The move will provide a boost to digitisation process, with MSOs benefitting most from the revised FDI limits. The first deadline for Digitisation in four metros is 31st October, 2012. However, the industry had mixed response to the hike, many desiring more liberalised policies like lower taxation and more conducive business environment for the limit increase to actually be utilized. Digitisation would be a transformative trigger for Indian broadcasting industry. In a recent release, UBS estimates subscription revenues to grow at a CAGR of 16% over 2012-17 due to digitisation. FICCI-KPMG had estimated TV subscription revenues to grow at a CAGR of over 18% from 2011-16 to reach Rs 505bn in 2016.

Contents

News of the fortnight

Investment Activity

News Update

Stock Market Updates

Peer Benchmarking

About Four-S Services

About Research4India

Research4India is the research services arm of Four-S Services Pvt Ltd. Here we provide regular research reports on key sectors of the Indian economy, and large unlisted companies in these sectors. These reports will be available on our upcoming site www.research4india.com, as well as from leading international research sellers like Thomson Reuters, Bloomberg, Research and Markets, CapitalIQ etc.

Research4India is the research services arm of Four-S Services Pvt Ltd, a leading provider of high-end research, financial consulting and Investment banking services. For subscription / custom queries, please contact Seema Shukla at [email protected]

Media and Entertainment Track

Investment Activity

PE Deals in M&E in 2012

Date Investor Target Stake (%) Amount ($mn) Strategy

23-Aug 24-Aug 9-Aug 7-Aug 1-Aug

16-Jul 11-Jul 6-Jul 26-Jun 12-Jun

Accel Partners JAFCO Asia Das Star Ventures Mercatus Capital, Hub Media L Capital
Indian Angel Network, Blume Ventures Jungle Ventures, Others Matrix Partners Nalanda Capital Norwest Venture Partners,Helion Venture Partners, Draper Fisher Jurvetson, and Western Technology Investment August Capital, Draper Fisher Jurvetson, Nexus Venture Partners, Helion Ventures and Silicon Valley Bank IndoUS Ventures Mumbai Angels, Blume Ventures, India Venture Partners (Mauritius), Christopher Preinz Associates (EU) Future Ventures Nirvana Ventures Advisors Providence Equity, Macquarie Bank Ojas Venture Partners Updata, WestBridge & Intel Capital Cisco Systems Indian Angel Network Ojas Ventures NA CCube Sequoia Capital

Big Tree Entt. (BookMyShow) Bubble Motion SideFX Entertainment PurpleStream PVR, subsidiary
HashCube Technologies Mobikon Twist Mobile India DB Corp Komli Media

NA NA NA NA NA
NA NA NA 1.09 NA

18.0 5.0 1.0 NA 19.6

NA 1.7 NA 7.3 39.0

Growth Early Early Early PIPE

Early Early Early PIPE Growth

6-Jun

Pubmatic

NA

45.0

Mezzanine

9-May 26-Apr

Magzter United Mobile Apps

NA NA

NA 1.0

Early Early

18-Apr 27-Mar 13-Mar 20-Feb 17-Feb 15-Feb 8-Feb 31-Jan 27-Jan 19-Jan 19-Jan

Amar Chitra Katha Games2win Hathway Cable BrizzTV Media Lab July Systems Qyuki Gamiana Digital Gaming Venturenet Partners Pvt Ltd InRev MyAdCorner.com Knowlarity Communications

9.8 10.0 17.3 NA NA 17.0 NA NA NA NA NA

NA NA 72.0 NA 15.0 5.5 1.0 NA NA NA 6.6

Late Late Late Early Late Early Early Early Early Early Growth

The space saw 24 deals till date raising a total disclosed amount of $237.7mn.

Research4India

Media and Entertainment Track

Mergers & Acquisitions in M&E in 2012
Date Acquirer Target Taproot India Communication Connectindia.in Communicate 2 Pvt Ltd Resultrix Media Pvt Ltd Metaflow Solutions Globosport Brand Advisory NewsX MMTG Labs Gameshastra - studio mGinger Multi-Screen Media Hungama Digital Services Private Limited ESPN Star Sports Indyarocks.com Diligent Media Corp - DB Corp's stake Way2SMS India Today Chakpak Only Much Louder Endemol India B4U Television Network Indigo Consulting DGM India Nai Dunia Media Pvt Ltd Fame India MobiMasta NetworkPlay Eterno Infotech MobiPrimo AdMax Network Guardian News & Media PaidContent, other assets Openwave Location Business UTV Software V&S DEN Networks 160by2 Eenadu Balaji Telefilms education/ mobile Stake (%) 51 100 100 100 100 50 NA 100 NA 100 32 51 50 NA 50 NA 27.5 NA NA 49 76 NA 94.6 NA 18.7 NA 70 NA 100 NA NA 100 NA 51 1.1 100 NA NA Amount ($mn) NA NA NA NA NA NA NA NA NA NA 271 NA NA NA NA NA NA NA NA NA 53.1 NA 0.7 NA 18.2 NA NA NA NA NA NA NA 430* 0.2 NA NA 395 1.6 Domestic Domestic Domestic Domestic Domestic Outbound Inbound Domestic Inbound Domestic Inbound Domestic Domestic Domestic Inbound Inbound Type

29-Aug 23-Aug 09-Aug 07-Aug 31-Jul 25-Jul 17-Jul 13-Jul 2-Jul 27-Jun 15-Jun 13-Jun 07-Jun 05-Jun 25-May 23-May 19-May 17-May 26-Apr 26-Apr 25-Apr 24-Apr 05-Apr 02-Apr 30-Mar 30-Mar 21-Mar 15-Mar 13-Mar 29-Feb 10-Feb 03-Feb 02-Feb 25-Jan 19-Jan 04-Jan c03-Jan 02-Jan

Dentsu Inc. Spade Financial Services Aegis Group Publicis Groupe InMobi Platinum Rye Entertainment Information TV Media InMobi Disney Interactive Media ValueFirst Messaging Sony Pictures JWT Singapore NewsCorp ValueFirst Messaging Essel Group ValueFirst Messaging AV Birla Group Trivone Digital CA Media, Zodius Advisors CA Media Eros International Plc Publicis Groupe Tyroo media, Inflection Digital Jagran Prakashan Inox (Gujarat Fluorochemicals) Affle, D2 Communications Gruner + Jahr Ver Se Innovation Pubmatic Komli Media GigaOM Persistent Systems Walt Disney Gujarat Telelinks Reliance Strategic Investments Way2Online Network 18 Group Undisclosed buyer

Inbound Domestic Inbound Inbound Outbound Inbound Domestic Outbound Inbound Domestic Inbound Inbound Inbound Domestic Domestic Domestic Domestic Domestic Inbound

*Estimated. The space saw 40 deals till date with a total disclosed amount of $1,177mn.

Research4India

Media and Entertainment Track

Corporate News Update
Essel Group to raise $500mn Essel Group would be raising close to $500mn to fund its growth and reduce debt. The funds would be used for Dish TV, Siticable Network and its education entity Zee Learn Ltd. Indian Television industry is at an exciting juncture with the Government working towards pan India digitisation. Siticable, formerly known as WWIL, will raise Rs 3.24bn from promoter firms through convertible warrants. Essel International and Essel Media will invest the amount in tranches with the first tranche being 25 per cent of the issue price on allotment of warrants on a preferential basis. The combined shareholding of Essel International and Essel Media will rise to 29.99 per cent post issue and the total promoter holding will increase to 73.08% from the existing 63.43%. Star India: Asianet IPO, MCCS Stake sale plans Asianet Communications Ltd (ACL) plans to launch an IPO, though the date has not been yet finalized. Star India holds 86% stake in ACL, whose flagship channels include Vijaya TV and Suvarna. In another development, Star India plans to sell its 26% stake in Media Content & Communications Services (MCCS) to Ananda Bazar Patrika (ABP) Group. ABP at present holds 74% in the Joint venture. MCCS operates three news channels Star News, Star Ananda and Star Majha. MCCS had revenues of Rs 2.6bn in FY12. This stake sale will mark the exit of Star from news broadcasting in India. Star and ABP have parted ways since April this year, and subsequently the use of brand name Star has been removed from its news channels. Deccan Chronicle liquidity crisis The troubles continue for DCHL. Cash strapped DCHLs Market Cap declined 19% in last one week. DCHL had a debt of Rs 32 bn on its books. The Group has mortgaged its publishing trademarks Deccan chronicle, The Asian Age, Andhra Bhoomi and Financial Chronicle. Its financial viability is being scrutinized by lenders, which recently decided against Corporate Debt Restructuring. In another development, BCCI has terminated Deccan Chargers. Earlier DCHL had rejected the bid of Rs 9bn from PVP ventures to buy the franchises. FIPB nod to DB Corp, WSJ The Foreign Investments Promotion Board (FIPB) has permitted increase of foreign equity participation in DB corp from the present 20%. FIPB has permitted Wall Street Journal Publishing to make a change in the foreign collaborator by way of overseas merger within group companies.

Industry News Update

Digitisation deadline looks feasible 68% digitisation has been achieved in four metros according to the Information and Broadcasting Industry. Mumbai leads with 95% digitisation, followed by Kolkata at 67%, Delhi at 53% and Chennai at 49% digitisation. The I&B Ministry also revealed that TV penetration in four metros is at 80%. Meanwhile, the Indian Broadcasting Foundation (IBF) has decided to postpone India TV Fest 2012, earlier scheduled in 1st week of November to 2013. Media FDI up 72% in FY12 Buoyed by the Disney-UTV deal, Indian Media sector has received Foreign Direct Investments of Rs 32.64 bn, an increase of 72% from 201011.

Research4India

Media and Entertainment Track

Stock Market Update

Share Price Performance

As on 14th Sep 2012
Zee Entertainment Sun TV Network Dish TV DB Corp Hathway cable Jagran Prakashan HT Media Den Networks Eros International ENIL TV 18 Broadcast Prime Focus PVR Onmobile Reliance Broadcast Reliance Mediaworks Balaji Telefilms Deccan Chronicle Nifty Sensex Market Cap (In ` mn) 1,62,125 1,21,319 81,591 34,466 31,221 28,954 20,470 20,182 14,698 11,045 8,111 7,242 4,728 4,455 3,953 3,051 2,882 2,278 Price (In ` ) 170.0 307.9 76.7 188.0 218.6 91.6 87.1 152.1 160.2 231.7 22.4 48.7 182.2 39.1 49.8 66.2 44.2 10.9 5577.7 18464.3 Percentage Change (%) 1W 0% 0% 5% -5% 5% 1% 1% 10% -4% 1% 22% 1% 1% 3% 0% 1% 8% -19% 4% 4% 1M -1% 0% 5% -1% 18% 1% 2% 22% -8% 4% 18% 7% -4% -9% 8% 7% 9% 3% 4% 4% 3M 26% 18% 35% 3% 23% 7% -9% 53% -7% 10% 18% 0% 21% 4% 12% 21% 26% -64% 10% 11% 6M 25% -5% 36% -14% 29% -12% -37% 47% -18% 8% -8% 0% 33% -41% -11% -25% -1% -75% 2% 3% 12M 50% 6% 1% -17% 171% -14% -39% 236% -32% -8% -39% -16% 53% -37% -40% -33% 49% -81% 11% 11% P/E (ttm) 26.4 18.1 NM 18.7 NM 15.7 13.2 80.8 9.3 18.3 NM 7.7 27.0 5.6 NM NM 18.1 3.8

Financial Benchmarking Quarter ending 30th June, 2012

Revenue
Zee Entertai nment Di s h TV* HT Medi a Sun TV Network* DB Corp TV 18 Broa dca s t Ja gra n Pra ka s ha n* Den Networks Eros Interna tiona l Decca n Chroni cl e Rel i a nce Medi a works Pri me Focus Onmobi l e PVR Ha thwa y ca bl e* ENIL Rel i a nce Broa dca s t Ba l a ji Tel efi l ms

EBITDA

PAT

Q1FY12 6,982 4,634 4,945 4,540 3,525 2,638 3,046 2,829 1,538 NA 1,929 1,675 1,364 1,174 1,225 687 745 358

Q1FY13 8,430 5,200 4,899 4,258 3,770 3,469 3,175 1,949 2,570 NA 2,022 1,882 1,852 1,774 1,363 700 527 386

YoY 21% 12% -1% -6% 7% 32% 4% -31% 67% NA 5% 12% 36% 51% 11% 2% -29% 8%

Q1FY12 1,559 1,225 899 3,659 987 222 826 179 299 NA -366 460 271 205 192 181 -183 -67

Q1FY13 2,333 1,556 669 3,230 765 151 788 385 517 NA -264 572 359 338 238 205 -101 2

YoY 50% 27% -26% -12% -23% -32% -5% 116% 73% NA NM 24% 32% 65% 24% 13% NM NM

Q1FY12 1,337 -183 515 1,876 611 211 497 18 217 NA -1,201 256 128 155 -148 93 -291 59

Q1FY13 1,582 -323 407 1,643 437 -235 557 122 314 NA -1,313 210 95 76 -159 134 -287 14

YoY 18% NM -21% -12% -29% NM 12% 568% 45% NA NM -18% -26% -51% NM 44% NM -77%
Figures in Rs.`mn

* Standalone results

Research4India

Media and Entertainment Track

Trailing Twelve months ending 30th June, 2012
Revenue (ttm) EBITDA (ttm) PAT (ttm)

Company Zee Entertainment Dish TV* HT Media Sun TV Network DB Corp TV 18 Broadcast Jagran Prakashan Den Networks Eros International Deccan Chronicle** Reliance Mediaworks** Prime Focus Onmobile PVR Hathway cable* ENIL Reliance Broadcast Balaji Telefilms

Q1FY12 30,300 15,957 18,656 24,675 13,200 10,680 15,257 13,248 8,608 10,309 10,290 6,704 6,736 5,796 5,964 5,323 3,199 2,280

Q1FY13 31,854 20,145 19,968 18,189 14,760 14,930 13,685 10,513 10,471 9,147 8,238 7,926 6,868 5,731 5,274 3,124 2,783 1,906

YoY 5% 26% 7% -26% 12% 40% -10% -21% 22% -11% -20% 18% 2% -1% -12% -41% -13% -16%

Q1FY12 7,907 3,291 3,411 19,438 3,873 685 4,392 1,287 1,860 3,475 -502 2,131 1,480 1,121 1,091 1,197 -247 -64

Q1FY13 8,169 5,315 2,638 13,714 3,125 -694 3,130 1,170 2,342 2,121 -1,342 2,454 1,487 926 903 1,245 -551 80

YoY 3% 61% -23% -29% -19% -201% -29% -9% 26% -39% 167% 15% 0% -17% -17% 4% 123% -225%

Q1FY12 6,167 -1,448 1,910 9,574 2,462 37 2,575 394 1,389 1,626 -4,490 1,017 1,020 237 -551 265 -828 49

Q1FY13 6,136 -1,729 1,546 6,696 1,847 -1,184 1,843 250 1,576 607 -5,292 946 798 175 -527 602 -1,126 159

YoY 0% NM -19% -30% -25% NM -28% -37% 13% -63%

* Standalone results st **Deccan Chronicle numbers are for FY ending 31 March.

18% -7% -22% -26% -4% 127% 36% 228% Figures in Rs.`mn

Research4India

Media and Entertainment Track

Four-S Services Pvt Ltd

Founded in 2002, Four-S has a strong & successful track record of genuine, accurate and objective advice to top Indian & global companies & PE Firms. Four-S has already proven success in corporate finance, strategy consulting, fund-raising, investment banking and investor relations mandates with 100+ corporates and large PE funds.

Four-S, trusted advisor to top Indian & Global Cos

Offering comprehensive bouquet of services to SMEs, Corporates and PE Funds

Research4India

Media and Entertainment Track

Disclaimer The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and its accuracy cannot be guaranteed. No representation, warranty, guarantee or undertaking, express or implied, is made as to the fairness, accuracy or completeness of any information, projections or opinions contained in this document or upon which any such projections or opinions have been based. Four-S Services Pvt. Ltd. will not accept any liability whatsoever, with respect to the use of this document or its contents. This document has been distributed for information purposes only and does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities. This document shall not form the basis of and should not be relied upon in connection with any contract or commitment whatsoever. This document is not to be reported or copied or made available to others. The company may from time to time solicit from, or perform consulting or other services for, any company mentioned in this document.

For further details/clarifications please contact: Seema Shukla [email protected] Gurgaon Office: 214, Udyog Vihar, Phase I, Gurgaon 122016 Tel: +91-124-4251442 Ajay Jindal [email protected] Mumbai Office: 101,Nirman Kendra, Opposite Star TV, Off Dr E Moses Road, Mahalaxmi, Mumbai 400001 Tel: +91-22-42153659

Research4India