Saturday, September 26, 2009


Good show continues

Growth in revenues from ads on regional channels
ZNL expects growth in ad revenues from regional GEC channels. However, ad revenues from news channels are likely to be flat in Q2FY10. Also, increasing adoption of DTH and incremental revenues from analogue are expected to boost subscription revenues.

Growing traction in new channels
Till now, ZNL had 3 strong driver channels – Zee News, Zee Bangla and Zee Marathi. Zee Telugu competes closely with Eenadu and Maa Telugu for the second spot in viewership share. Zee UP, launched in April 2009, too is performing well. Zee Kannada is also close to breaking even. Zee Business is likely to benefit from the strong IPO ad pipeline. Going forward, we expect Zee Telugu, Zee Kannada and Zee Business channels to become the other growth drivers for ZNL.

Zee Bangla’s strategy is more sustainable
Unlike its competitor Star Jolsha, which is resorting to disruptive programming, Zee Bangla has continued with its strategy of gaining sticky viewership through low cost programming, which is likely to be a more sustainable strategy (as seen in Hindi GEC).

Outlook and valuations: Regional play; maintain ‘BUY’
We continue to like ZNL as it is one of the best picks in the buoyant regional market. It has multiple drivers-strong bouquet of news and regional channels, improving viewership, likely overall improvement in ad industry from H2FY10, successful new shows, and strong management in place. We expect it to be one of the key beneficiaries of the likely revival in ad spends in H2FY10, and hence, maintain our ‘BUY’ recommendation on the stock. On relative return basis, the stock is rated ‘Sector Outperformer’ (refer rating page for details).

To see full report: ZEE NEWS