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Sector Update: Print Media Newsprint prices have seen a meaningful decline, an appreciating INR is an added positive for publishing companies- JPL, HT Media and DCHL. As per most of the publishers, NP prices have corrected by 20-25% and international prices are expected to stabilize around US$650-700/MT, over the medium term. Immediate financial benefits though may be limited given higher cost inventory being carried; expect full impact H2FY10E onwards. Cautious optimism in industry regarding a revival in advertising revenue trends on the back of anticipated policy action leading to a recovery in economic growth and corporate earnings. Macro-environment is nevertheless materially better than 2Q ago. The traditional media (print, TV broadcasting) will be the early beneficiaries of a pick-up.

Result Update: Zee News. Zee News Ltd has reported a decent set of numbers - revenue growth of 26% YoY, aided by 24% advertising revenue growth and 30% subscription revenue growth. Profitability declined 40% YoY, impacted by new launches. Revenue growth and cost containment likely to help in an adverse macro environment- FY10E. The prospects of medium term advertising spend trends is not that optimistic, ZNL is likely better off given positioning of strong franchises in regional markets, which are likely to enjoy higher growth rates. Subscription revenues are also now getting meaningful; sustained accelerated growth in this stream will provide a counter cyclical growth opportunity. Ahead of industry growth rates, healthy financial results and stock outperformance that are in contrast to larger broadcasting peers validate ZNL having been our only preferred pick in the segment, for the last 2Q. At valuations of 16x FY10E EPS and 10x EBITDA,most of ZeeNews' strong prospects (28% re...

Zee News - well diversified, reasonable financial discipline, news genre to see healthy advertiser interest in an otherwise cautious environment. ZNL has three driver channels - Zee Marathi , Zee Bangla and Zee News - making up close to 70% of its total advertising revenues. This reduces the risk of overdependence on one property and ensures a well diversified revenue stream, unlike other competitors in broadcasting. Subscription revenues- 26% CAGR over FY08-10E. Pay revenues- a counter cyclical growth opportunity, expect domestic subscriptions to grow led by increasing DTH penetration . Going forward over FY08-10E the subscription revenues are expected to grow at a 26% CAGR. The pay revenues will likely be a strong growth driver for ZNL financials along with ad revenue contributions from existing channels. Margins to largely hold over FY08-10E despite new investments and slowing growth. Stable ratings and breakeven of new properties may support. Earnings growth for ZNL, is likely ...

PVR Ltd - Stock Update. The outlook on exhibition stocks is cautious which is underpinned by likely delays on property handover front given delays from real estate developers and a weak macro for consumption that is expected to adversely impact property footfalls and occupancies. For PVR new investments towards retail entertainment formats and other allied ventures will likely drag earnings over FY09-10 and come in the backdrop of an adverse macro that will delay business break-evens. The consolidated margins will struggle over the medium term, with limited available levers, as operators counter a rising cost base (new properties), slowing revenues (lower occupancies) and investments towards business lines. Also likely peaked ATP's and SPH's will be another pressure point. Ther is no immediate catalysts as focus will remain on macro for consumption and timely handovers from real estate developers. The DCF based methodology for valuing the stock works out to a price target o...

Balaji Telefilms : Lower volumes due to discontinuation of Star programs and FWICE strike lead to crash in revenues. Higher costs of production and deteriorating pricing power for content players crunch profitability. Balaji Telefilms has been underpinned by discontinuation of high margin programs (on Star), foray into new high budget programming, lack of scale in business, waning popularity of its content and an expected erosion of pricing power as recent GEC entrants face tough times. Adjust earnings and price target to account for dismal Q3FY09 results and deteriorating business outlook for content players that are unable to drive scale. While the stock has corrected 36% over the last 3m, it makes us no less negative on BTL’s medium term prospects. Multiple headwinds persist and will lead to sharp declines in profitability over FY09-10E.