Mumbai: The street saw yet another large investment in a media stock, underlining the immense interest in one of country’s fastest growing sectors. Reliance Capital Ltd, an arm of the Anil Dhirubhai Ambani Group, bought a 6.27% stake in Global Broadcast News (GBN), which, at the day’s close of Rs 493.50, was valued at Rs 82.7 crore.
Global Broadcast News, which got listed on the stock exchange last week, closed its first day at Rs 510 , registering a gain of more than 100% over its issue price of Rs 250. Officials from Reliance Capital refused to comment on the GBN investment.
Harendra Kumar, head of research at ICICI Direct, said since Reliance Capital owns Adlabs Films, the decisioncould be based on a future content-sharing plan. “Or, it could just be a good portfolio bet,” he speculated.
The deal was the latest in a spate of investments in the media sector by Indian and foreign investors. In January, the Blackstone Group picked up a 26% stake worth $275 million (Rs1,220 crore) in Ushodaya Enterprises Ltd, the holding company for the media baron Ramoji Rao’s assets, which include the ETV channels and Eenadu, a newspaper.
In the same month, Nimbus Communications, the television company that holds the broadcast rights for Indian cricket until 2010, received funding worth $125 million from 3i, Cisco, and Oman International Fund.
However, analysts feel the media sector has a long way to go. “It is still nascent on the stock market and hasn’t really seen growth in terms of numbers, except TV 18,” said Nihar Oza, vice-president of BRICS Securities.
Over the past year, TV 18’s value has risen by 113%.
A number of media stocks have recorded double-digit growth in the last three months. Since 13 November 2006, for instance, the stock price of Sun TV, India’s largest media company with a market cap of Rs 11,576 crore , has risen by 15.8%. Others haven’t been too far behind. Deccan Chronicle grew by 26.1%, NDTV by 19%, and TV Today by 32%.
India’s media and entertainment industry, according to the tax and advisory services firm PricewaterhouseCoopers, is expected to grow at 19% annually until 2010, when it will be valued Rs 83,740 crore ($19 billion).
The TV industry alone is estimated to grow at 24% annually until then, nearly tripling in value to Rs 14,800 crore.
The small but mushrooming radio industry will quadruple in size, and internet advertising will multiply by seven times, expanding at an annual rate of 50%.