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Sun TV earnings below expectations

Sun TV earnings below expectations
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First Published: Thu, Nov 03 2011. 11 24 PM IST

Sun TV chairman Kalanithi Maran.
Sun TV chairman Kalanithi Maran.
Updated: Thu, Nov 03 2011. 11 24 PM IST
Chennai: Kalanithi Maran-promoted Sun TV Network Ltd posted earnings and sales that were below already-lowered analyst expectations as viewership for its flagship Tamil entertainment channel Sun TV slumped and subscription revenue slipped, hurting advertising income, in a market already sluggish from rising interest rates and global financial pressures.
Sun TV chairman Kalanithi Maran.
Still, three media analysts told Mint that Sun TV’s business remained sound, citing rising profit and revenue. They added that concerns remain about the Central Bureau of Investigation (CBI) probe of Kalanithi Maran’s younger brother Dayanidhi Maran related to alleged wrongdoing during his tenure as telecom minister. Also a worry is Tamil Nadu chief minister J. Jayalalithaa’s actions against the media business of Kalanithi Maran, grand-nephew of her rival M. Karunanidhi, leader of the Dravida Munnetra Kazhagam.
“Although we have a positive outlook on the fundamentals of the company, political issues in Tamil Nadu and the CBI’s stance on 2G (second-generation telecom spectrum and licences case) make us uncomfortable,” said Archana Shivane, an analyst with Mumbai-based brokerage KR Choksey, by email.
Ahead of the earnings announcement, Sun TV closed 5.66% higher at Rs 273.35 on Thursday on the Bombay Stock Exchange. The benchmark Sensex gained 0.1%.
The Chennai-based company posted a net profit of Rs 180.12 crore for the quarter ended 30 September, up 7.5% from the year earlier. The net profit number was 4% lower than the Rs 187.7 crore expected in a Bloomberg poll of analysts.
Revenue, which rose 6.2% to Rs 451.26 crore, was about 6% below analyst estimate of Rs 480.33 crore. Earnings per share of Rs 4.57, 7.5% higher than in the year before, fell short of the Rs 4.81 estimate. The results follow Sun TV’s turbulent stock market performance in recent months, during which it hit new lows. The stock slumped to Rs 214.50 on 4 October, the lowest in two years, amid reports that the CBI planned to file a case against the Maran brothers by November.
Some analysts had predicted that Sun TV’s domestic cable revenue would be hit by the revival of state-run Arasu Cable in September by Jayalalithaa, who had in her election campaign promised to end the monopoly that Sun Cable Vision (previously Sumangali Cable Vision) enjoyed in Tamil Nadu.
Sun TV executives could not be reached for comment.
An analyst, who spoke to Sun TV’s chief financial officer V.C. Unnikrishnan, said Sun TV’s direct-to-home business, registered a 6% drop and the company’s cable arm saw a 16% decline in revenue. Advertisement revenue rose a marginal 2.2% to Rs 235 crore, the analyst said. Another analyst confirmed the numbers independently.
“Ad revenues have been muted,” the Mumbai-based analyst said. “Advertisers are reluctant to spend because of the tough macroeconomic conditions and if Sun TV’s viewership continues to fall then advertising could drop further.”
Anupama Chandrasekaran contributed to this report.
amritha.v@livemint.com
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First Published: Thu, Nov 03 2011. 11 24 PM IST