HT Media has started to size up the operations of the beleaguered Deccan Chronicle Holdings (DCHL), with an eye on entering the southern markets. A senior management team from HT Media has been camping in Hyderabad for the past weeks evaluating the various opportunities in the south.
DCHL, which owes around R5,000 crore to various banks and financial institutions, is looking to raise funds to sustain its operations and has already placed its IPL team Deccan Chargers on the block.
?The team has carried out a study of Deccan Chronicle and has submitted a report to the management,? a media source aware of the development told FE. ?However, they did not meet the DCHL management. They took feedback from the market in terms of area wise circulation, age groups of readers and checked on information regarding office and home readership profiles,? the source added.
When contacted Vinay Mittal, chief financial strategist, HT Media Ltd told FE that there are very few media houses in the country for them to evaluate. ?So we keep looking out for options that are available in the market. With regard to DCHL, it is a convoluted deal. The company has a lot of debt in its books. So at this point, I cannot say anything further.?
Mittal, however, agreed that DCHL would be a good fit for the company’s current portfolio. DCHL is one of the leaders in the southern newspaper market with a circulation of over 14.5 lakh. Last fiscal DCHL posted a profit of R60.68 crore on revenues of R 869.40 crore.
HT Media registered revenues of R 2,078 crore during the same period.
Two analysts tracking the media sector said HT may even look at picking up only the Bangalore business of DCHL, to gain access to the southern market. ?They had tried to establish an edition in Bangalore before, but did not go ahead. Now with DCHL in severe financial trouble, they may want to look at their assets,? they said.
?Even if they do not want to purchase a majority stake, there is an option to go for a joint venture with DCHL,? said a Mumbai-based media analyst. ?The inorganic route is their best bet to grow in the southern market. Entering this zone on one’s own steam is a different ball game when compared to other markets in the country.?
According to this analyst, HT Media has R120-150 crore of cash on its balance sheet, excluding liquid assets. As per its latest annual report, the company’s revenues and net profits have grown at a CAGR of 18.4% and 29.2% respectively over the last 7 years.
?All the northern players like Jagran Group, DB Corp and HT Media for long have been planning to enter the southern market. Jagran tried two to three years back, but failed to get a foothold. If HT Media succeeds it will be beneficial to HT’s advertisement revenue and help them gain a strong presence in the southern region,? said Amit Patil, research analyst (media), Angel Broking.
?However, we also have to keep in mind DCHL’s current debt in the market. The company has not published its balance sheet this year and have delayed it. We are not sure of their finances.?
A FICCI-KPMG report on media and entertainment industry said that in 2011 the R20,900 crore print industry grew by 8.4% from R19,300 crore in 2010. The growth in advertisement revenues has grown at a CAGR of 8.7%, whereas circulation revenues have displayed a CAGR of 3.7% between 2007 and 2011, the report said.
Shares of DCHL closed at Rs 11.03, down 9.96% on Wednesday on the Bombay Stock Exchange, while that of HT Media closed at R 86.30, down 1.71%.
