Buy and Sell for Free! Thursday, February 10, 2000
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This week we focus on a complete analysis of the
satellite industry
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Cinevista explores new vistas 

 
Among the pioneers in television software, the company has big plans.

The current buoyancy in the stockmarkets and the new-found fancy for media stocks is reason enough for a plethora of media companies making their public issues. Cinevista Communications is one from this lot hitting the primary market with its IPO (initial public offerings). Since the company is adopting the book building route, the issue price is not fixed. However, market grapevine puts it in the region of Rs 200.

Such a stiff price demands a track record. And Cinevista boasts of a good background. It was among the earliest entrants in the TV software production in India. Today, with 15 years in programming, the company has 1,300 hours of original and dubbed programming in its library. As co-head of marketing, Sunil Sangra points out, "Cinevista has always had its software broadcast on prime time." The list is impressive with serials such as Katha Sagar, Zindagi, Gul Gulshan Gulfam and Junoon, among others. The company also prides itself on content, pointing out that Sahitya Akademi award winner, Pran Kishore writes exclusively for it.

Leveraging the archive
Cinevista's library is also raking in the moolah from a variety of channels, right from Star Plus to the regional channels. Itís current software on air includes the historical Noorjahan and the mythological Jai Mata Ki. Cinevista's programming spectrum is also well spread. Currently, the company has an hour of broadcasting each day. And plans are afoot to increase it to three hours a day.

Other plans include Web broadcasting that is putting audio-video content on the Web. Managing director, Sunil Mehta perceives a huge potential market from the NRI population who are unable to access serials shown on terrestrial networks. Content-wise too, the company is on a sound footing, and outsourcing is on the anvil too. The requisite Web presence is already there -- Cinevista owns, designs and maintains three sites namely cine-vista.com, cineone.com and ysougotmusic.com. It has some jobwork assignments to its credit as well --sapnamodi.com was designed and is being maintained by the company.

It is then capitalising on these strength areas that Cinevista is making its public issue. Cinevista's investment budget of Rs 45 crore is being entirely financed through equity. It has allocated Rs 6 crore for software acquisition, Rs 22 crore for software development and working capital, and Rs 9 crore is towards hardware and administrative investments.

New revenue sources
On the financial front, last fiscal Cinevista's income fell from Rs 23.81 crore to Rs 21.69 crore, which officials attribute to a change in strategy. As CFO, Satjit Singh Dhillon says, "We were modifying our only-Doordarshan policy to improve returns."

Operating margins did firm up slightly last year, from 35 to 37 per cent. They have been maintained in the first half. Officials claim that with growth in exports, they will only improve further. For Cinevista, exports are a big growth area. Already it has a presence abroad on Swarnavahini, a terrestrial Sinhalese channel, where it has bagged a half-hour prime time slot. Dubbed versions of Junoon and Ghutan are screened on weekdays and weekends, respectively.

Another export avenue is leveraging on the scripts. Cinevista plans to make serials for overseas channels using scripts from its library. The language will be local, as will the cast and locations. Production will be the company's responsibility. This strategy has been chalked out to improve the company's margins. Through alliances, Cinevista plans to recycle its serials this way in Malaysia and US (pay channels). It's export turnover for this year is pegged at Rs 1.5 crore, which is expected to go up to Rs 3.5 crore next year.

The area of concern
Webcasting is a grey area, where the company is reluctant to reveal the revenue estimates. Industry observers say that vanilla webcasting is on its way out. In webcasting what is of significance is what one builds into it. After all, where is the thrill to view something on the PC when the same can be seen comfortably on TV via the satellite network?

Webcasting is profitable in pockets where a particular programme is not accessible on the available satellite channel options. For instance, imagine an NRI cooped up in some remote place wants to watch a cricket match. But the sports channels there are not interested in telecasting the match because the viewership is minuscule. Webcasting could also facilitate the timing convenience. The company claims to have a wide NRI market. But, it may be recalled that webcasting is easily accessed only on broadband. Currently, less than 1 per cent of the overall Net users have broadband. Narrowband does not have the capacity to support normal webcasting.

Similarly, in the Web business, it is proven that sites -- net of the exclusive content -- are easily duplicated. In its own field, the company's average brand recall is not very high. Hence, for investment considerations, the company would be a good play only for content and not for anything else.

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