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Zee scrip downfall -- Is media hype
responsible?
Yagnesh Kansara
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Mumbai
: So the question being asked all around the stock market
is why the Zee Telefilms stock prices are falling consistently
and whether the down fall in this counter will stop ? It is
also being feared that this stock, which was once quoted in
five digits not a long time ago at the bourses, may begin
to quote in meagre two digits in the days to come.
What are the factors that have caused the sudden downturn
of the stock which was the darling of the fund managers. They
chased this counter in the market with a fear of not losing
the bus of country's first truly media stock.Market intermediaries
unanimously feel the main reason for the downfall is the media
hype the stock has created. The stock when got listed on the
bourses, was the only media stock. Even today, it is the only
listed media stock. "Market began to compare the Subhash
Chandra-owned company Zee Telelfilms with that of Rupert Murdoch's
News Television and as a result the market expectation also
ran high as far as it's performance was concerned. The company
which launched first private television channel in the country
and entered in to the business of development of television
software could satisfy the market expectation in the initial
years which not only created the euphoria but lots of interest
among the marketmen." said Mr Ramnath S, analyst with
Taib Securities.
The company's
performance was compared with the other new economy stocks,
particularly stocks of software development companies which
made their debut during the same period. It was the only media
stock began to be quoted at very high PE ratio. Infosys Technologies
and Wipro were being quoted at PE ratio of around 200 and
the euphoria about the company forced the operators to take
the stock at these levels. Once upon a time the interest of
the market in this counter reached to such a level that the
stock was being quoted at PE ratio of 400 to 450. There were
all reason for the stock to reach five digit level, recalled
the brokers.
Zee scrip
downfall: Is media hype responsible?
The shareholding pattern of the company was such that floating
stock was very limited in the market and too many fund managers
including Foreign Institutional Investors (FIIs) were chasing
very few shares. Every fund manager wanted the Zee stock in
their portfolio and they did not wish to miss the bus of higher
NAVs by not investing in this counter.
The media
hype the stock created helped it to penetrate in markets as
well as garner the larger share of business from the lone
rival Doordarshan initially. But when it came to compete with
other private channels and friends becoming foes, the struggle
for the company started. The company began to expand to stem
the slowdown in the advertisement revenue which came under
severe pressure, said Mr Ramnath.
However,
the good news is that the expansion plan of regional channels
branded as Alpha (Gujarati, Marathi and Bengali) has progressed
as per schedule but in course of this, it has incurred major
capital expenditure and it will take another 15 to 18 months
to reap the fruits of this investment, he added.
Another
prudent decision it has taken is to put on hold the most ambitious
project of satellite telephony Agrani. The company has realised
that it is not in position to fund this project as it does
not have the required cashflow.
Mr Pradeep
Doshi, a BSE broker and analysts feels that company's decision
to go for stock split is one of the main reason for the consistent
downfall in the stock price. Rs 10 face value share of the
company was divided in to 10 shares of Rs 1 face value which
resulted in to more liquidity.
The problem
with the company began with the deteriorating programming
quality, says Mr Ramnath. Zee's dwindling fortunes has nothing
to do with the success of Kaun Banega Crorepati (KBC) or Sawal
Dus Crore Ka (SCDK) jointly hosted by Anupam Kher and Manisha
Koirala. It is the Star Plus's aggressive marketing strategy
to push it's programming. Zee not only lost to KBC but also
to Sony. It began to taste the fruits of competition. In the
initial years Zee was commanding premium on their ads rates
but it's margins and revenue rates came under pressure after
the race hot up, he added.
Though
the company is hopeful of resounding come back says Mr Sainath
Iyer, spokesperson of the company. "We are looking at
fundamentals and that have always been strong. All Alpha channels
are going strong except the the main channel but that also
will regain the top slot in days to come as you'll see host
of new programme this month and in the months to come. We
can't comment on how market behaves" he added.
However,
analysts and other market intermediaries are equally hopeful
about the come back of the company in the limelight. "what
it needs is at least two to three good quarterly results with
improved quality of programming and the company will be back
on track. Looking at the entrepreneurial vision of Mr Subhash
Chandra, it is not difficult. After all he is the person who
has made the once sick company Essel Packaging in to the most
successful company and given the first amusement park -Esselworld-to
the country on the lines of Disneyland", adds Mr Ramnath.
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