Sun TV shares tank 22% after home ministry denies clearance2 min read . Updated: 09 Jun 2015, 12:43 AM IST
The home ministry rejected a proposal by the I&B ministry for providing security clearance to 33 television channels of the Chennai-based company
Mumbai: Shares of Sun TV Network Ltd on Monday fell as much as 27.6%, their sharpest fall since 27 July 2012 after the home ministry rejected a proposal by the information and broadcasting (I&B) ministry for providing security clearance to 33 television channels of the Chennai-based company.
In intraday trade, the stock touched a low of ₹ 258, a level last seen on 30 August 2012.
The home ministry rejected clearance on the ground that their continued airing would have an “adverse impact on economic security" of the country. Analysts expect the rejection of the security clearance may lead to cancellation of the channels’ broadcasting permit.
The I&B ministry has been informed about the decision of the home ministry, which was believed to have been influenced by pending criminal cases against Kalanithi Maran and his brother and former Union minister Dayanidhi Maran, Indian Express reported.
Group CFO S.L. Narayanan told TV channel CNBC-TV 18 on Monday morning that he didn’t think the licences, which come up for renewal between 2021 and 2023, will be revoked.
If that happens, however, he admitted that the results could be catastrophic. Almost all of the network’s net profit of a little less than ₹ 740 crore in 2014-15 came from its 33 channels, he said.
“The market is reacting to a worst-case scenario where Sun channels go off screen but there is small probability for that to happen," said a Mumbai-based analyst who tracks Sun TV Network on condition of anonymity.
“It is yet to be proven that Kalanithi Maran is guilty," he added. “Even if the channels go off screen there would be other broadcasters and media houses who would be willing to buy out Sun channels (as the channels are run profitably) so there will not be any long-run impact," said the analyst.
The Maran brothers are facing a Central Bureau of Investigation (CBI) probe over the alleged allotment of 300 high-speed BSNL telephone lines to the residence of former communications and information technology minister Dayanidhi Maran in Chennai which were then extended to his brother’s channel.
There are two other pending cases against Sun TV Network and its owner Kalanithi Maran—one involving the sale of Aircel to Malaysia’s Maxis and another involving money laundering.
Brokerage Credit Suisse cut the outlook of the firm to “neutral" from “outperform" and also cut its target price by 36% to ₹ 290 a share, Bloomberg reported. Shares of Sun TV closed down 21.73% at ₹ 278.90 apiece, while benchmark Sensex fell 0.92% to 26,523.09 points.