Chennai: The shares of Kalanithi Maran-controlled Sun TV Network Ltd fell 4.7% on Wednesday after close aide Hansraj Saxena resigned and investors feared that a drop in channel viewership may crimp profits in the three months ending 30 September.
Sun TV’s chief financial officer V.C. Unnikrishnan said Saxena, chief operating officer of production and distribution unit Sun Pictures, resigned earlier this week. An analyst said that investors were also worried that earnings may fall.
“Second quarter results probably won’t be that great because of the overall economy not looking good and Sun TV’s viewership share is also declining in Tamil Nadu,” said a Mumbai-based analyst who didn’t want to be named. “Also, the launch of Arasu cable will see quarter-on-quarter declining subscription revenue as well. This could also be impacting the results.”
Shares of Sun TV ended trading at Rs262.80 on the Bombay Stock Exchange, even as the BSE TECk index that includes telecom, technology stocks and media companies, including Sun TV, rose 0.2%. The exchange’s benchmark Sensex dropped 0.47% to 16,446 points.
Viewership of Sun TV, although still one of the highest among Tamil general entertainment channels, slipped to 63.9% last week from 66.9% two months ago, according to the latest data from TAM Media Research. The decline followed the September revival of a discounted state-run cable business, Arasu Cable TV Corp. Ltd, by Tamil Nadu chief minister J. Jayalalithaa aimed at ending Maran’s Sun Cable Vision’s near monopoly in the state. Arasu Cable began airing pay channels eight days ago without Sun’s popular bouquet of channels.
Vijay TV, the No. 2 general entertainment channel after Sun TV in the state, is now included in Arasu’s basket, and saw its channel share rise to 12% from 8.2% over the past nine weeks.
Investors could also be concerned about this week’s comments from investigators that they could file a case against Maran’s brother Dayanidhi by November over his alleged involvement in irregularities during his tenure as telecom minister in 2004-2007.
“If Dayanidhi is arrested, it will raise question marks as to when Kalanithi could be arrested,” said the analyst, speculating on the rationale behind the fall in the share price. “This (Dayanidhi’s possible arrest) would bring Kalanithi closer to the CBI (Central Bureau of Investigation) and he is the man who runs the show.”
These events have exacerbated concerns voiced by the company’s management in last week’s annual general body meeting. Unnikrishnan said Sun TV’s revenue is likely to take a hit this fiscal as a result of interest rate hikes and recent media industry developments in Tamil Nadu.
The company has faced a number of challenges in recent months from Jayalalithaa’s policy decisions on the media industry, seen as a campaign to strike at her political rival and former chief minister M. Karunanidhi, who is the Marans’ granduncle.
In July, Saxena, known to be close to Kalanithi, was arrested for allegedly cheating a film distributor. This was followed by a string of similar cases that kept Saxena in jail until 14 September, when he was released on bail.
Saxena will be replaced by another Sun executive, C. Sembiam Sivakumar, according to Unnikrishnan.
Anupama Chandrasekaran contributed to this story.