>Zee News (ANGEL BROKING)

'Time to tune in'

Zee News (ZNL) is an attractive play on the dual emerging themes of Regionalisation and Digitisation owing to its strong positioning in the lucrative Regional & News Broadcasting space, its proven execution track record and backing by the Zee Group. We believe that steady Viewership gains in new channels and Monetisation of the same coupled with higher Subscription Revenues will drive ZNL’s future Earnings growth. We Initiate Coverage on the stock, with a Buy recommendation and DCF-based Target Price of Rs37.

■ Regional + News = The Right Genre Mix: ZNL's business model clearly has an edge over other Media firms with limited presence in a single genre like News as ZNL offers investors an opportunity to play out a more resilient and diversified theme. Going ahead, weexpect ZNL's Advertising opportunity to register modest 12.3% CAGR in Revenues over FY2008-10E to Rs2,854cr. We also expect ZNL to emerge as one of the key beneficiaries of the upcoming General Elections.

■ Established Bouquet - Set for monetisation: ZNL is a diversified regional player with a strong foothold in all its markets. Its National channels, viz. Zee News and Zee Business have gained significant traction in Viewership while cash cows Zee Marathi and Zee Bangla are maintaining their strong No.1 position. ZNL's strategic foray in the South has also paid off well with Zee Telugu and Zee Kannada performing remarkably, and Zee Tamizh being well on track. Thus, as ZNL monetises its competitive position across markets, it is well poised to clock 23.3% CAGR in Ad Revenues over FY2008-10E.

■ Digitisation to accelerate ZNL's Revenue growth: A strong and diversified Bouquet coupled with advent of Digital Distribution platforms places ZNL in sweet spot in terms of maximising the emerging Subscription opportunity. We expect ZNL to register CAGR of 35.4% in Subscription Revenues over FY2008-10E driven by 77.5% CAGR in DTH Subscription Revenues (owing to DTH rollout) and Monetisation of its Southern Regional channels.

To see full report: ZEE NEWS