Media firms rock with 4G redefining entertainment

Share prices of some media companies have soared nearly 60% in March alone owing to the rapid growth in demand for movies and entertainment content from subscribers amid an aggressive expansion of 4G services by telecom operators such as Bharti Airtel, Vodafone and Idea.
Analysts expect content owners with movies and entertainment libraries to gain significantly as they are expected to monetise their assets. Telecom operators with 4G services and distribution platform companies such as Hungama and Hooq are increasingly looking to bolster their content offering as the number of subscribers is growing fast.
Mukta Arts has surged 58% in March so far this year, while Shemaroo Entertainment 29.5%, Eros International Media has rallied 29%, Raj Television Network has gained 23%, Saregama India 20%, and Tips Industries, Balaji Telefilms and Sun TV Network have appreciated nearly 15% each. All these stocks have outperformed the Nifty Media Index that has gained about 6.5% this month so far.
“The media and entertainment companies with a movie library are expected to receive significant one-time boost from the 4G services launch by telecom operators,” said Anand Shah, chief investment officer with BNP Paribas Mutual Fund. “However, investors should remain very selective about stocks and evaluate whether companies can sustain their future earnings momentum with newer properties,” he said.
Bharti Airtel, India’s leading telecom operator, is offering value-added services through Wynk Music and Wynk Movies app for 4G subscribers for streaming and downloading music and movies.
Vodafone is offering 4G subscribers Hungama play and Hooq app for entertainment and streaming of movies, live TV shows, music and full length content. Idea, through a similar strategy, is providing music and movie content in association with Hungama and Eros Now. Analysts are betting big on the launch of Reliance Jio, which is planning to make 4G network commercial later this year and has similar plans for subscribers.
“Companies with strong legacy are expected to monetize their assets while those with robust pipeline are expected to find value in the market,” said Sanjay Chawla, director research at JM Financial. “Some of the media and entertainment companies will definitely see value unlocking as telecom companies are planning to bundle up their services through the 4G operations,” he said.
Shemaroo Entertainment, one of the key content players, had earlier signed a 1,000-movie title partnership with HOOQ, a joint venture between Warner Bros, Singtel and Sony Pictures. Analysts expect more similar partnerships of this nature owing to increase in smartphone penetration and improved bandwidth speeds.
Netflix, the America-based video streaming content producer and distributor giant recently launched its services in India. Analysts remain positive about local media and entertainment companies as global players may tie up for local content.