NDTV (consolidated) has reported revenue growth of 32% at Rs3.7bn, EBITDA loss of Rs1.4bn and net loss (pre ESOP) of Rs1.7bn in FY08. Revenue growth during the year was driven by 30% growth in core news operations, while new channels (NDTV Imagine, NDTV Lifestyle, Metro Nation) beginning to contribute to the topline. As expected, operating expenditure has almost doubled to Rs5bn on account of heavy investments towards content and marketing on new launches (NDTV Imagine in particular). What excites us in NDTV is the sustained high growth momentum in the core news broadcasting property as indeed the fact that new channels have begun to contribute within the very first few quarters of operations.
In line with our thesis, NDTV is rapidly scaling up as a comprehensive media conglomerate with presence spanning across multiple genres of broadcasting (news broadcasting, GEC, lifestyle, regional), Media Process Outsourcing, International consulting, internet, new media, etc. Sensing the urgency of execution, NDTV in the current year has added 5 broadcasting properties including the GEC venture – NDTV Imagine and lifestyle channel – NDTV Good Times, besides various regional and international channels. NDTV is further enthusing confidence in its execution ability with NDTV Imagine grossing GRPs of over 80 within first quarter of launch and fighting neck to neck with Sony for number three position in the genre. To further strengthen its endeavour to emerge as a leading media conglomerate, NDTV has roped in NBC Universal as a strategic investor in NDTV Networks (USD150m invested for 26% stake). NBC, we believe, would bring immense strategic value for NDTV for the broadcasting as well as proposed film and sports broadcasting operations. NDTV, with over USD270m of fund raise in the last one year, is fully funded for its expansion. With a view to rope in strategic partner in the step down properties as also unlock value, NDTV is proposing demerger of the news operations from non news businesses. Our positive bias on the business model and confidence in NDTV’s execution prompt us maintain NDTV as our top pick in the sector. Reiterate Outperformer.
