Sun Shines Bright

The Sun TV Network was incorporated in December 1985 as a privately owned company under the leadership of Kalanithi Maran. From a single TV channel, it has grown to a range of 20 top-rated news and entertainment channels in four south Indian languages. Five are in Tamil, two Malayalam, six Kannada, and seven in Telugu.

The flagship channels are Sun TV (Tamil), Surya (Malayalam), Udaya (Kannada), and Gemini (Telugu). Though presence is largely based in the southern states, Sun plans to launch channels in other languages.

Recently, the company, through its subsidiary, South Asia FM, entered a strategic alliance with Red FM to expand its radio business in the north, west and east. Through its subsidiary Kal Radio, it launched radio stations in Tirupati, Madurai, Bangalore, Hyderabad, Tutikorin. It has 44 radio licenses to set up radio channels, indicating robust expansion plans. It plans to cover all of India and much of the South Asian subcontinent.

The Sun TV Network enjoys strong brand recognition, which it has achieved largely through a focus on local-language programming that appeals to regional viewer preferences. It operates leading Tamil radio stations under the name Suryan FM. It is the first to make profits in the radio business. Radio accounts for around 25% of gross sales.

The company launched a children’s channel, Chutti, in Tamil, which has outdone even mainstream channels and has been steadily increasing market share. The company leads in all genres in Tamil: mainstream (Sun TV), movies (K TV), music (Sun Music), and news (Sun News).

The entertainment and media industry has been faring spectacularly of late, and the going looks good for Sun TV. Chennai tops the list of average television viewers all over the country. Chennai viewers watch TV for an average of 19 hours a week, compared with Delhi (15 hours), Mumbai (15.7 hours) and Kolkata (16.1 hours), according to a Television Audience Measurement survey. Roughly 90% of Chennai viewers watch only regional channels. Sun TV had the highest audience share (71.2%) in the past year, compared to its closest rivals in the region, Vijay TV and Kalaignar TV, who had just 5%.

Sun TV Network’s main threat is the feud between the Maran family and Tamil Nadu chief minister M Karunanidhi, whose party, the DMK, recently launched Kalaignar TV. It remains to be seen how Sun TV will fare without the patronage of the DMK, which it enjoyed for years.

However, many media analysts feel it won’t be easy for a newcomer to upstage Sun TV. Sun’s main promoter, chairman and managing director Kalanithi Maran, is the largest shareholder, with a 79.97% stake. The company has won many awards for programming.

Maran has also won awards for entrepreneurship. The company has been successsful in fending off competition, and maintaining viewership. The alliance with Red FM, drawn up last quarter, will enable the company to boost its presence in the fast-growing radio market.

Sun TV has the second largest market cap in the entertainment industry, and its high earning per share shows that it is giving better returns than its rivals. The market cap, and Sun’s second highest price-toearning ratio, indicate huge demand for the stock, which is fairly priced. Even national channels cannot match it for earnings or market capitalisation. Sun TV Network, despite being a regional channel, shows great growth potential.

Sun TV Network has posted good results in the second quarter of the financial year 2008. The standalone revenue of the company for the quarter is Rs 208.76 crore, EBITDA is Rs 154.14 crore, and net profit is Rs 80.16 crore. The quarter saw increased competition in the markets.

However, Sun TV Network continued to dominate the television business in south India, with a market share of 60% in Tamil Nadu, 32% in Andhra Pradesh, and 29% in Karnataka. The total income for the second quarter increased to Rs 217.25 crore, up 119% from Rs.99.04 crore in the cooresponding quarter last year. Profit after tax jumped to Rs.93.07 crore, up 120% from Rs 42.23 crore for the corresponding quarter last year. The return on equity (ROE) has been around 47.56% in FY 07, an increase of 6% over 41.54% in FY 06.

The profitability of the company can be seen from the following comparative study of ratios from FY06 to FY07: retained earnings increased by 74.08%, operating income/total asset rose from 0.590% to 0.693%, showing an increase in profitability over the total assets employed. The net worth of the company has increased by 297.57% from Rs 299.15 crore (FY06) to Rs 1,189.32 crore (FY07). Similarly, reserves increased by 372.46% from Rs 237.15 crore (FY06) to Rs 1,120.43 crore (FY07).

Besides a huge market share in the southern part of the country, Sun TV Network has long-term plans to expand nationwide. It has started off with radio operations, which are doing well, and is likely to expand its TV business to the other parts of the country. The company has a sound growth record and excellent management. It is a good investment option for investors with a long-term horizon and moderate risk appetite.

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2 Responses to “Sun Shines Bright”

  1. tejal patankar Says:

    are there more reviews on tvtoday on other regional channels as the one above? how and where can they be accessed?

  2. harino1 Says:

    Dear Tejal,
    Thanks for your Interest , regional sections can be accessed thru the menu in the right panel.

    Thank you.

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