`

PGDM BATCH: 2017-19

Critical
Analysis Of
Organisation
Sun TV Network

SUBMITTED TO: TAMAL DATTA CHAUDHURI

SUBMITTED BY: NIKI KUMARI (17011)
 PREFACE
This report constitutes my critical analysis of a company, written and implemented between
the 4th semester of the PGDM Program at Calcutta Business School. The problem description
was conceptualized in cooperation with my professor (Dr. Tamal Datta Choudhuri). I am
grateful and humbled by the time and effort he has devoted to supervising the project, and his
enthusiasm for offering advice, support and feedback has been an inspiration and
significantly increased the quality and extent of the work.

Critical analysis of an Organization is a paper in which we apply all our basic concepts that
we have learnt in our previous year and by applying those ideas and concepts we analyse the
performance of an organization and link it to corporate level strategy and business level
strategy. The analysis of an organization is done by tools and techniques, analytical
frameworks and these help to understand and know the Vision and Mission of the
organization, and the process of management that is visible in the company, the growth
prospects, the market size, the customer profile, the competitive position and financial
performance.

The above mentioned course can be learnt by observing of annual reports of Indian
companies, which will help us to measure the respective performance of an organization.

The reason for studying the course- CAO can be said in a few points.

1. Personal investment portfolio- If we study about a company we would know about

its financial status and hence we would get an idea whether we should invest our
money in this respective company and what amount of returns will we get back from
our initial investment.
2. Analyst Job- Analyst Job is specific as we would have the required skills to analyse a
organization on certain predefined parameters.
3. Advisor- We can advise people related to any information of a selected company and
tell them whether this company would be beneficial for them and what all future
prospects are available for the company for its required growth.
4. Develop an appreciation for each and every company and our concept of criticizing
a company would be minimized as if a company is there then it must be having a
customer base and must be making profits and returns, so no company is good or bad
all are there to sustain their respective business.

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 ACKNOWLEDGEMENT
The satiation and euphoria that accompany the successful completion of the project would be
incomplete without the mention of the people who made it possible. I would like to take the
opportunity to thank and express my deep sense of gratitude my mentor Prof. Dr. Tamal
Dutta Chaudhuri. I am greatly indebted him for providing his valuable guidance at all stages
of the study, his advice constructive suggestions, positive and supportive attitude and
continuous encouragement, without which it would have not been possible to complete the
report. I hope that I can build upon the experience and knowledge that I have gained and
make a valuable contribution towards this industry in coming future.

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 CONTENTS
S.NO PARTICULARS PAGE NO.
1) INDUSTRY OVERVIEW 4-5
2) REPORT OF MEDIA AND 5-7
ENTERTAINMENT
3) INTRODUCTION 8-9
4) METHODOLOGY 9-10
5) SWOT ANALYSIS 11-12
6) BCG MATRIX 12-15
7) PORTER’S FIVE FORCES MODEL 15-16
8) COMPANY’S DESCRIPTION 16-18
9) PRESENT SCENARIO 18-21
10) CORPORATE STRATEGY 21-22
11) FINANCIAL RATIOS 23
12) HOW DOES THE COMPANY GROW? 23-24
13) COMPETITORS ANALYSIS 25
14) THE ROAD AHEAD 26
15) GROWTH AREAS 26
16) CONCLUSION 27
17) REFERENCES 28

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 INDUSTRY OVERVIEW
MEDIA AND ENTERTAINMENT INDUSTRY
Introduction

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and
is making high growth strides. Proving its resilience to the world, the Indian M&E industry is
on the cusp of a strong phase of growth, backed by rising consumer demand and improving
advertising revenues. The industry has been largely driven by increasing digitisation and
higher internet usage over the last decade. Internet has almost become a mainstream media
for entertainment for most of the people.

The Indian advertising industry is projected to be the second fastest growing advertising
market in Asia after China. At present, advertising revenue accounts for around 0.38 per cent
of India’s gross domestic product.

Market Dynamics

Indian media and entertainment (M&E) industry grew at a CAGR of 12.25 per cent from
2011-2017; and is expected to grow at a CAGR of 11.6 per cent to touch Rs 2,032 billion
(US$ 31.53 billion) by 2020 from Rs 1,308 billion (US$ 19.46 billion) in 2016.The industry
provides employment to 3.5-4 million people, including both direct and indirect employment
in CY 2017.

The number of newspaper readers in India has increased by 38 per cent between CY 2014
and CY 2017 to reach 407 million.

India is one of the highest spending and fastest growing advertising market globally.

Recent development/Investments

The Foreign Direct Investment (FDI) inflows in the Information and Broadcasting (I&B)
sector (including Print Media) in the period April 2000 – September 2017 stood at US$ 6.86
billion, as per data released by Department of Industrial Policy and Promotion (DIPP).

The Indian digital advertising industry is expected to grow at a Compound Annual Growth
Rate (CAGR) of 32 per cent to reach Rs 18,986 crore (US$ 2.93 billion) by 2020, backed by
affordable data and rising smartphone penetration.

India is one of the top five markets for the media, content and technology agency Wavemaker
where it services clients like Hero MotoCorp, Paytm, IPL and Myntra among others

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After bagging media rights of Indian Premier League (IPL), Star India has also won
broadcast and digital rights for New Zealand Cricket upto April 2020.

Total number of Mergers and Acquisition deals increased to 63 in FY17 from 58 in FY16

Government Initiatives

The Telecom Regulatory Authority of India (TRAI) is set to approach the Ministry of
Information and Broadcasting, Government of India, with a request to fastrack the
recommendations on broadcasting, in an attempt to boost reforms in the broadcasting sector.
The Government of India has agreed to set up the National Centre of Excellence for
Animation, Gaming, Visual Effects and Comics industry in Mumbai. The Indian and
Canadian Government have signed an audio visual co-production deal to enable producers
from both the countries exchange and explore their culture and creativity, respectively.

The Government of India has supported Media and Entertainment industry’s growth by
taking various initiatives such as digitising the cable distribution sector to attract greater
institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH
satellite platforms, and granting industry status to the film industry for easy access to
institutional finance.

Road Ahead

The Indian Media and Entertainment industry is on an impressive growth path. The industry
is expected to grow at a much faster rate than the global average rate.

Growth is expected in retail advertisement, on the back of factors such as several players
entering the food and beverages segment, e-commerce gaining more popularity in the
country, and domestic companies testing out the waters. The rural region is also a potentially
profitable target.

REPORT OF MEDIA AND ENTERTAINMENT INDUSTRY:

The Indian media industry has tremendous scope for growth in all the segments due to rising
incomes and evolving lifestyles. Media is consumed by audience across demographics and
various avenues such as television, films, out of home (OOH), radio, animation and visual
effect (VFX), music, gaming, digital advertising, and print.

The Media & Entertainment industry is anticipated to grow at a Compound Annual Growth
Rate (CAGR) of 11.6 per cent during 2016-20 to reach Rs 2,032 billion (US$ 31.53 billion)
in 2020 from Rs 1,308 billion (US$ 19.46 billion) in 2016. The industry provides
employment to five million people, including both direct and indirect employment as of
2017.

Advertising expenditure in India is expected to grow 13 per cent year-on-year to Rs 69,346

crore (US$ 10.71 billion) in 2018 and Rs 1.07 trillion (US$ 16.70 billion) by 2020. India

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digital advertising market has reached Rs 8,202 crore (US$ 1.27 billion) in 2017 and is
forecasted to grow at a CAGR of 32 per cent to reach Rs 18,986 crore (US$ 2.95 billion) by
2020.*India’s digital revenues are expected to reach US$394.22 million by 2021. India is the
second largest television market in the world with US$ 10.14 billion in revenue in 2017. The
Indian film industry is expected to grow at a rate of 11.9 per cent by 2020.

The Government of India has supported this sector's growth by taking various initiatives such
as digitising the cable distribution sector to attract greater institutional funding, increasing
Foreign Direct Investment (FDI) limit from 74 per cent to 100 per cent in cable and Direct-to-
home (DTH) satellite platforms, and granting industry status to the film industry for easy
access to institutional finance.

The Entertainment sector is split into 9 segments:

Segments of Indian Entertainment Industry:

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  The entertainment industry continues to be dominated by the television segment, with
the segment accounting for 44.24 per cent of revenue share in 2016, which is expected
to grow further to 48.18 per cent by 2021
 Television, print and films together accounted for 79.54 per cent of market share in
2016, in value terms.
 Print media would be the second largest sector in the overall entertainment industry in
India, following which sectors of Out of Home (OOH) and Radio are expected to
contribute almost 2 per cent each to the entire industry by 2021
 India prints media industry generated revenues worth US$ 4.51 billion in FY2017
(till December 2016)

Regional Entertainment:

 Regional Entertainment channels comprising mostly of regional GECs (General

Entertainment Channels), regional movies and regional music.
 In print media, the rise in literacy rates, significant population growth, the rise in
incomes in smaller towns and the entry of big players in regional markets is likely to
drive future expansion of circulation and readership across India.
 Viewership in South India is dominant for regional entertainment as Tamil and
Telugu channels together account for more than half of the total viewership. It is
comparatively less for Oriya and Bhojpuri, which is equivalent to only 2 per cent
each.
 Between 2015-2017, YouTube’s regional viewership in India has tripled, with the top
10 regional YouTube channels having subscriber bases ranging between 300,000-
800,000.

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 INTRODUCTION
Sun TV Network Limited is an Indian mass media company headquartered in Chennai, Tamil
Nadu, India. It is a part of Sun Group and is Asia's largest TV network. Established on 14th
April 1993 by Kalanidhi Maran, it owns a variety of television channels and radio stations in
multiple languages. Its flagship channel is Sun TV, which was the first fully privately owned
Tamil channel in India. Sun Group has owned Hyderabad-based IPL team Sunrisers
Hyderabad since 2012.

 Sun Group owns 33 TV channels across four South Indian languages Tamil, Telugu,
Kannada and Malayalam.
 Sun Group owns two daily newspapers and five magazines in Tamil. Dinakaran
was founded in 1977 by K. P. Kandasamy and was acquired from K. P. K. Kumaran
by Sun Network in 2005.
 It is the second largest circulated Tamil daily in India after Dina Thanthi. Tamil
`Murasu is an evening newspaper.
 The group owns the magazines Kungumam, Kumguma Chimizh, Kungumam
Thozhi, Aanmigam, Mutharam and Vannathirai.
 The group owns 48 FM radio stations across India broadcasting under the names
Suryan FM and Red FM.
 The Sun TV Network is available in Asia, South Africa, Australia, Europe and
USA.
 Sun TV is a Content provider.

Background:

Sun TV Network Ltd. was incorporated as Sumangali Publications Pvt. Ltd. on 18th
December 1985. The company dropped the word 'private' from its name on 1 July 1996 and
was renamed as Sun TV Ltd. on 27 March 2000. Though the company reinserted the word
private in its name on 9 October 2001, it later converted itself to a public limited company in
December 2005. The name was again changed to Sun TV Network Ltd. with effect from 17th
April 2007 after the company was amalgamated with Gemini TV Pvt. Ltd. and Udaya TV
Pvt. Ltd.

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The company was promoted by Kalanithi Maran brother of Union Minister Dayanidhi Maran.
Kalanithi Maran is the Chairman and Managing Director of the company. His wife Kavery
Kalanithi is the Joint Managing Director.

The company's core businesses include producing and broadcasting satellite television
content and radio FM programming in major regional languages of Southern India ie Tamil,
Telugu, Kannada and Malayalam. It owns regional TV channels such as Sun TV, K TV,
Chutti TV, Surya TV, Gemini TV and Udaya TV and FM radio stations like Suryan FM. It
also has a presence in the print media and publishes news dailies like Dinakaran and Tamil
Murasu. The company has ventured into Direct To Home (DTH) service and sells the
product under the brand name Sun Direct. It has also entered film production through its film
division Sun Pictures.

The company's distribution channels are available outside India to countries including USA,
Canada, Europe, Singapore, Malaysia, Sri Lanka, South Africa, Australia and New Zealand.

METHODOLOGY:
Choice of Study: Critical analysis is used across different industries for various reasons. In
business, critical analysis might commonly be applied to proposals and project summaries.
Individuals conduct critical analysis of performance measures and solutions. . Researchers,
doctoral students, graduate faculty, and those in the human service and behavioral services
fields often conduct written critical analysis to evaluate works or literature. Regardless of the
purpose, critical analysis is a scientific process that includes specific steps in order to achieve
the most valid interpretation. In this report, the application of critical analysis to evaluating
and interpreting evidence is explored using theoretical consideration.

Data Collection:

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In this report data is merely collected from secondary data due to limited time constraint. The
sources of secondary data are:

Secondary Data:
The secondary data has to be collected from the records and published annual reports of the
company, web sites, Journals etc.
1. Data collected from various books and websites.
2. Secondary data collected from newspapers & magazines.
3. Data collected from internet.
4. Publication.
5. Information provided by stock broking centres for various places.

Procedure:

First of all we will do the industry analysis of media and entertainment industry in India.
This will lead to the background and a brief description of the company. There will be a
theoretical framework in which SWOT analysis, BCG Matrix and Porter’s five forces are
used. After that company’s critical analysis is being done. Based on that we will analyse the
efficiency, effectiveness, innovativeness and sustainability of the company. Based on our
analysis we will recommend and conclude the topic.

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 SWOT ANALYSIS

Strengths:
1. Brand Equity and unique business model

2. Strong distribution backbone using two verticals: one for South Indian promotions and
other for international promotions

3. Second largest television network in India, with 20 channels and 43 FM radios in several
Indian languages.

4. Brand reputation of world's no.1 Tamil channel that features movies, news, serials and
shows - 24 hours a day

5. Has presence in 27 countries including South Africa, Australia, Europe, USA, Canada and
Asia

6. Snapped five-year telecast rights for the Karnataka Premier League (KPL)

7. Forayed into the radio broadcasting segment and Print media

8. Competitive advantage of having reach, frequency and patronage

9. Have higher viewership ratings

10. Good political connection

11. Owns variety of television channels and radio stations in multiple languages covering all
Indian States

12. Owner of Hyderabad based IPL team known as Sun Risers for revenue generation

Weakness:
1. They are known in south only.

2. Lack of aggressive promotion and advertisements.

3. Content quality and viewer preference have to be constantly monitored.

4. Constant need to keep tabs on programmes aired.

Opportunities:
1. Attract customer through more advertisements and subscriptions.

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2. Launch services in other key markets of India at cheaper rates to increase viewership.

3. Generate income from movie distribution and content trading through its subsidiaries.

4. Involve in the production, distribution, and acquisition of film content.

5. Form strategic alliance with other broadcasting companies to form a distribution venture.

6. Identify out-dated technologies and update with latest innovations.

Threats:
1. Increased competition with new entrants and more innovation

2. Advertising income revenue is the main revenue component which can fluctuate widely

3. Sharp increase in carriage fees as channels compete for premium placements in prime
slots.

BCG MATRIX
Before understanding the BCG Matrix let us first see what are the products manufactured by
Sun TV Network.

Community, personal and social services provided by Sun TV Network are as follow:

FIG: COMMUNITY, PERSONAL AND SOCIAL SERVICES (SOURCE: PROWESS)

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Sun TV Network was also in Transport an Allied Services. They are as follows:

Product/s manufactured/traded Aircraft Charter Services

Measure Sales/Total Income (%)
Mar-09 0.56
Mar-10 0.46
Mar-11 0.29
Mar-12 0.32
Mar-13 0.14
Mar-14 0.01

FIG: TANSRPORT SERVICES PROVIDED (SOURCE: PROWESS)

Financial Services and Business and Consultancy Services are newly launched services in
the recent years by the Sun TV Network their role in revenue generation is as follows:

Product/s manufactured/traded
Financial services and leasing Finance Income Dividend Consultancy Services Rental Income Business Support Services
Mar-17 2.37 0.02 0.15
Mar-18 1.27 0.09 0.14 0.04

FIG: FINANCIAL SERVICES; BUSINESS AND CONSULTANCY SERVICES (SOURCE: PROWESS)

Above mentioned tables shows the services provided by Sun TV Network and their
contribution of revenue in total revenue generated by the company (in %). Some are existing
services which is being provided from the very beginning and some is being launched newly
after eliminating the services which are not generating much revenue for the company.

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 FIG: BCG MATRIX

In the above shown figure, there is a 2 by 2 matrix known as BCG Matrix.

Any business knows that, to survive, it has to have products that bring in money now and
products that will bring in money in the future, and identify which products are a drain on
resources without potential to come back. While it's easy to identify the profitable products,
determining how the rest of your portfolio fits into the growth scheme can be harder. The
BCG matrix was designed as an analysis tool to help you determine the role of products on
your future profit margin so you can decide where to invest.

Created by the Boston Consulting Group, the BCG matrix – also known as the Boston or
growth-share matrix – provides a framework for analysing products according to
growth and market share. The BCG matrix has been used since 1968 to help companies
gain insights on what products best help them capitalize on market-share growth
opportunities.

There are four quadrants in BCG matrix named as:

Stars: The business units or products that have the best market share and generate the most
cash are considered stars. For Sun TV network, pay channels is the main source of revenue
and it holds most of the market share of Sun TV Network. So it is a star for them.

Cash cows: Cash cows are the leaders in the marketplace and generate more cash than they
consume. These are business units or products that have a high market share but low growth
prospects. Advertisement is the cash cow for Sun TV Network.

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Dogs: Dogs are units or products that have both a low market share and a low growth rate.
They frequently break even, neither earning nor consuming a great deal of cash. Sun TV
network was in programme licencing and television programme which was a dog for them
because they are not generating much revenue for the company neither they have the market
share and growth. So they discontinued it in the year 2016. Also, they were into
transportation and allied services which they discontinued in yea 2014.

Question marks: These parts of a business have high growth prospects but a low market
share. For Sun TV Network, financial services and leasing and consultancy services are the
newly brought services to the market so, it is a question mark for them whether the service
would give them much revenue or they can acquire market share of that particular sector.

PORTER’S FIVE FORCES MODEL

THREAT OF
SUBSTITUTES

BARGAINING
BARGAINING COMPETITIVE POWER OF
POWER OF RIVALRY BUYERS
SUPPLIERS

THREAT OF NEW
ENTRANTS

FIG: PORTER’S FIVE FORCES MODEL

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 1) Threat of Substitutes: - The substitutes to entertainment are films, print, radio,
Internet. However television has the highest reach in urban as well as rural areas in
different socio economic classes. So, there is a positive impact on Sun Tv.
2) Bargaining power of Suppliers: - The suppliers in his case are the content providers.
The broadcasters would try to maintain or increase their market share by improving
their quality of content. Thus, the broadcaster’s expenditure on content would
increase. We expect the bargaining power of the content providers to be high and their
realisations per hour to increase.
3) Bargaining power of Buyers: - The buyers in this case are the advertisers. If the
broadcaster's channels enjoy high viewership ratings, then its bargaining power is
high. Advertisers would clamour to advertise their products on such channels. The
channel enjoys high ad rates and even the broadcaster's debtor days are low. However,
if the channel is losing market share, then its bargaining power is low .It is not able to
hike ad rates and debtor days may increase. The viewership ratings of Sun TV
Network’s flagship channel 'Sun TV' have been increasing enabling it to hike its ad
rates. The advertisement revenues of the company have increased to 46% in FY18.
4) Threat of new Entrants: - Highly qualified and creative people are recruited on a
permanent basis. Heavy investment is made in specialised broadcasting equipment
and studios. Huge marketing expenditure is incurred and high lease charges paid for
satellite and uplinking hub. All this expenditure is needed if the broadcaster decides to
start its operations. Thus, the threat of new entrant is low.
5) Competitive Rivalry: - The rivalry between existing players is very high. All the
existing broadcasters are trying to tap the same audience and enter into contracts with
the same advertisers. The broadcasters also resort to copying the format of a
successful programme on a rival channel. The broadcasters also resort to poaching of
key personnel of rival broadcasters.

COMPANY DESCRIPTION
It was the first fully privately owned Tamil channel in India when it emerged in 1993. Its
serials and soaps have generated the maximum TRP for viewership all over India, making it
the most popular network of channels in India. All its channels occupy the top spots in their
respective languages. Sun TV, in Tamil is the Network flagship and most popular channel.
Being the premier channel, Sun TV is often used to refer cable TV in general or to the Sun
TV Network in general. Kalanithi Maran is the Chairman and Managing Director of media
giant Sun Network and has been given awards including the CNBC Business Excellence
Award in 2005.

Sun Network also offers FM Radio Stations (93.5 FM) It has 45 FM Radio Stations and has
recently forayed into the print business. In addition, it has also recently launched a DTH
satellite television service entitled Sun direct DTH. Sun TV and its sister channels have a
dominating share of viewership in Tamil Nadu. Its cable arm, SCV is cable distribution and
Sun Direct is the dominating DTH (direct-to-home) player in the state. Its radio network

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Suryan has a lion’s share of listenership; its magazine
Kungumum and newspaper Dinakaran are leaders.www.sun.in Is the default page on
computer screens across the state since it owns the leading ISP. More than 80 per cent of the
state’s population decides on how to vote, where to shop, what to buy based on the news,
information and entertainment coming from the Sun Group.

History of SUN TV

India second largest television network, popularly known as SunTV Network Limited has
power packed Twenty TV channels, Forty One FM Radio Stations, Two Daily Newspapers
and Four Magazines in several Indian languages. The Company was incorporated as
Sumangali Publications Private Limited in 18th December of the year 1985. The SunTV
Network originally began as a Tamil satellite channel and further expanded with other
channels in other languages including Telugu, Malayalam and Kannada. The channels
offered from the company are Sun TV, KTV, Sun Music, Sun News, Chutti TV, Surya TV,
Gemini TV, Teja News, Gemini News, Gemini Music, Gemini Cable Vision, Udaya TV,
Udaya Movies, Udaya News, etc. The Company also has its own earth station, which beams
programs directly to the satellite. The SunTV Network is available in Asia, South Africa,
Australia, Europe and USA. In Tamil New

Years Day at 14th April of the year 1993, Sun TV entered Tamil homes for the first time.
Initially for four-and-a-half hours a day on a time-sharing arrangement with ATN. Over a
period of time with Sun TV became a 24-hour channel in January of the year 1995. The word
private in the name of the company was deleted with effect from 1st July of the year 1996. As
of September 1998, Domestic up linking commenced from Chennai through VSNL and the
company had launched our first Malayalam channel Surya TV in October of the same year
1998.

During March of the year 2000, Domestic up linking through own teleport commenced from
Chennai and also fully digital transmission of all TV channels commenced. The name of the
company was changed to Sun TV Limited. The fresh certificate of incorporation consequent
to the change of name was granted to the company in 27th March of the year 2000. Sun TV
Network had launched Sun News, news and current affairs based channel in May of the same
year 2000. The word was reinserted in the name of the company in 9th October of the year
2001. The Company bagged Indian Television Academy award for the best Tamil,
Malayalam, Kannada and Telugu TV Channel for the year 2001. The Company had launched
KTV, a 24-hour film based Tamil channel with its primary focus on films and film-based
programme in October of the year 2002. Sun Music, the first 24-hour Tamil music channel
was launched under the group in September of the year 2004. As at January of the year 2005,
SunTV Network had launched a film and music based 24-hour Malayalam language channel
under the name of Kiran TV. During the year 2003, the first radio Frequency Modulation
(FM) channel in Tamil of the company were came to existence from three major cities of
Tamil Nadu, i.e., Chennai, Coimbatore and Tirunelveli and also it holds licenses for 45 FM
radio stations across India. During the year 2005, Kal Radio Limited and South Asia FM
Limited were incorporated for the purpose of bidding for FM licenses under the Phase II

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Policy of MIB. The status of the company was subsequently changed to a public limited
company by a special resolution of the members passed at an extraordinary general meeting
held in 15th December of the year 2005.

The fresh certificate of incorporation consequent on change of name was granted to the
company in December 27th 2005. In the year 2006, Sun TV Ltd had launched 3 more FM
Radio Stations under the brand S FM through its subsidiaries Kal Radio Ltd and South Asia
FM Ltd. The Company some channels became a pay mode with effect from 2nd December of
the 2006. The Company had hiked its advertisement rates by 5% to 27% with effect from
January of the year 2007. During the identical year of 2007, Sun TV signed an exclusive
Cable & Satellite channels agreement with Nimbus Communications Ltd. Sun TV
Network Ltd through its subsidiary - South Asia FM Ltd (SAFL) had entered into a strategic
alliance with Red FM to further its FM Radio broadcasting business in the North, West and
East Indian markets. The Company got its current name SunTV Network Limited after the
merger of Gemini and Udaya in 24th April of the year 2007. During the year 2008, from
January to April, Sun TV Network had launched its FM Radio Station under the brand FM at
different locations, such as Kanpur, Thiruvananthapuram, Thrissur, Mangalore, Kannur
(Kerala), Mysore and Jamshedpur. It is the most viewed Tamil television channel in the
world, with syndicated broadcasts in several countries, such as the United Kingdom, United
States, and Canada. It remained privately held until 2006, when it was listed on two Indian
stock exchanges, the National Stock Exchange of India and the Bombay Stock Exchange.
The channel broadcasts a variety of shows, such as numerous soap operas, game shows,
newscasts, and shows of general entertainment. Sun TV also hosts numerous film-industry–
related events in Tamil Nadu and, as of 2011, hosts the Sun Kudumbam Awards ceremony
annually. The channel recently won an award for being the best general entertainment
channel in the Asian continent. Sun TV has been accused by some Hindus of being biased
against Hindus.

PRESENT SCENARIO OF THE COMPANY:

Sun Network with its presence across genres like general entertainment, movies, music,
news, kids, action, life and with a dominant market share in the five southern states of India
(Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and Telangana) ensures continued and
sustained viewership and prominent role in the Media and Entertainment Industry. Asteady
flow of highly popular programs and a dominant share of audience viewership have given the
network tremendous pricing power vis-à-vis competitors.

The drive initiated by Government towards digitalisation and addressability for cable
television would help Sun TV Network, being the largest regional television network to be
one of the major beneficiaries of the recent growth in the DTH space, it is expected that this
new stream of revenue for the Company arising from the increased DTH subscriber base in
South India would maintain a positive momentum in the coming years.

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 FIG: SHAREHOLDING PATTERN AND DISTRIBUTION OF SUN TV

FINANCE AND HUMAN RESOURCE

Finance:

The Total Income for the year ended March 31, 2018 was Rs. 3,002.10 crores as against Rs.
2,703.80 crores during the previous year ended March 31, 2017. Profit Before Tax was Rs.
1,658.40 crores as against Rs. 1,490.35 crores in the previous year. Profit After Tax was Rs.
1,093.04 crores as against Rs. 979.41 crores in the previous year. During the financial year
ended March 31, 2018, the Board of Directors declared the Interim Dividends of Rs. 2.50/-
per equity share (50%) of face value of Rs. 5.00/- each declared on August 11, 2017,
November 10, 2017, February 9, 2018 and on March 12, 2018 and have not recommended
any Final Dividend. The dividend payout would result in a total dividend of 200%, i.e., Rs.
10.00/- per equity share of face value of Rs. 5.00/- each for the financial year ended March
31, 2018. (Prev. Year of 200%, i.e., Rs. 10.00/- per equity share of face value of Rs. 5.00/-
each). The Reserves and Surplus of the Company as on March 31, 2018 stood at Rs. 4,443.03
crores as against Rs. 3,824.71 crores as on March 31, 2017.

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Human Resources:

At Sun Network, with 1682 employees, human resource is a key asset capital and an
important business driver for the Company’s sustained growth and profitability. Hence, we at
Sun Network believe that training, like all organizational development processes cannot be a
function of time, but rather an on-going process with the developmental needs and business
planning processes being formalized constantly. A continuous review of the monitoring
process is underway and procedures and systems are being institutionalized across the
organization.

FINANCIAL REVIEW

1. EARNINGS

Total Income

The Total Income for the year ended March 31, 2018 was up by 11.03% at Rs. 3,002.10
crores as against Rs. 2,703.80 crores during the previous year ended March 31, 2017. The
sustained growth and consistent higher margins are reflective of the Company’s continued
dominance in broadcasting business in the Southern states. Profit before tax (PBT), Profit
after tax (PAT) and Total comprehensive income Profit Before Tax was up by 11.28% at Rs.
1,658.40 crores as against Rs. 1490.35 crores in the previous year. Profit After Tax was up by
11.60 % at Rs. 1,093.04 crores as against Rs. 979.41 crores in the previous year. Total
Comprehensive income was up by 11.67% at Rs. 1,092.64 crores as against Rs. 978.43 crores
in the previous year.

Dividend

The outgo on account of interim dividend including dividend tax is Rs. 474.32 crores
(previous year Rs. 474.31 crores). Following is the income data of Sun TV.

FIG: INCOME DATA OF SUN TV (SOURCE: EQUITY MASTER)

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 1. FINANCIAL POSITION

FIG: BALANCE SHEET DATA OF SUN TV NETWORK (SOURCE: EQUITY MASTER)

Shareholder’s Funds

Shareholders’ Funds as on March 31, 2018 was Rs. 4,640.07 crores (previous year Rs.
4,021.75 crores).

Loan funds

The Company is debt free and had no loan funds - secured or unsecured as on March 31,
2018 (previous year Rs. Nil). Assets Net block of property, plant & equipment were at Rs.
709.97 crores and Investment properties were at Rs. 12.00 crores. The addition to property,
plant & equipment for the year was Rs. 17.44 crores and Investment properties Rs. 0.11
crores. The capital expenditure was funded through internal accruals. Net block of intangible
assets and capital work in progress (including capital advances and intangible assets under
development) as on March 31, 2018 were at Rs. 317.33 crores and Rs. 44.15 crores
respectively.

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CORPORATE STRATEGY:

Risk management:

The performance and growth of media industry are dependent on the health of the Indian
economy and in particular the economies of the regional markets it serves. These economies
could be adversely affected by various factors, such as political and regulatory action
including adverse changes in liberalization policies, social disturbances, terrorist attacks and
other acts of violence or war, natural calamities, interest rates, commodity and energy prices
and various other factors. The media industry in India has been continuously fraught with
regulatory issues including those of license, investment caps and ownership limits. Although
Sun Network has performed well in spite of these adversities, further regulatory changes
always remain a concern.

Sun TV Network has been able to capitalize on its leadership position built over the years, by
fortifying its hold over quality content. It is able to practice its strategy of selling telecast
slots under exclusive agreements and additionally ensuring a continued supply of quality
content. A steady flow of highly popular programs and a dominant share of audience
viewership have given the network tremendous pricing power vis-à-vis competitors. South
India produces the largest number of films per year with a huge movie following target
audience, Sun Network ensures access to popular content, by purchasing larger quantum of
all South Indian movies on a perpetual rights basis.Risk Mitigation Sun Network believes that
it would not be disadvantaged and would manage competition through content and a pan
India spread.

Internal control:

INTERNAL CONTROL

Weak internal control can jeopardize the Company’s financial position.

Risk mitigation

The Company has in place systems and processes, commensurate with its size and nature of
business so as to ensure adequate internal control while ensuring smooth conduct of
operations and compliance with statutory requirements under all applicable legislations. The
Company has implemented SAP ERP system, which ensures significant automation of
processes, with sufficient IT system controls in place. Independent internal audit is carried
out to ensure adequacy of internal control system and adherence to policies and practices.
The Audit Committee reviews the functioning of the internal audit function. Cautionary
Statement Statements in this Management Discussion & Analysis describing the companies
objective, projections, estimates and expectations may constitute "Forward looking
statement" within the meaning of applicable laws & regulations. Actual results, performances
or achievements could differ materially from those expressed or implied in such forward-
looking statements.

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 FINANCIAL RATIOS OF THE COMPANY:

Mar-15 Mar-16 Mar-17 Mar-18

Efficiency ratio
Gross profit margin 70.00 70.00 66.90
Net profit margin 32.6 37.3 39
Current ratio 9.747 9.362 8.306 6.378
Inventory turnover ratio 464.647 289.659 317.453 734.252
Profit per employee 3,900.40 4,839.00 5,261.20
Effectiveness Ratio
Return on net worth 21.81 24.69 24.35 23.55
Asset turnover ratio 62.48 63.92 58.81 55.14
Dividend pay-out ratio 33.45 45.23 28.75 25.71
Innovativeness Ratio:
Company sales/ Industry 7.43 5.84 12.03 11.55
sales
Sustainability Ratio
P/E RATIO 20.6 21.7 15.2 21.7
P/BVPS 78.5 83.4 88.2 102.2

The company is doing well in terms of Efficiency, Effectiveness, Innovativeness and

Sustainability.

How does the company grow?

As we know a company grows either from its savings or they are using technology which is
very efficient and useful.

We can measure growth by:

Growth= (Current year sales – Last’s year Sales) / Last year sales

SUN TV NETWORK
YEAR 2018 2017 2016 2015 2014
SLAES PER YEAR 2,862.45 2,558.25 2,403.98 2,243.62 2,096.78
% CHANGE IN SALES 11.89094107 6.417275 7.147378 7.003119

NET FIXED ASSETS 709.97 763.01 437.83 714.5 770.61

% CHANGE IN NET FIXED ASSETS -6.951416102 74.27084 -38.7222 -7.28124

LONG TERM BORROWINGS 12.02 13.76 6.16 3.85 3.52

% CHANGE IN LONG TERM BORROWING -12.64534884 123.3766 60 9.375

NET PROFIT 1,093.04 979.41 849.28 737.23

RETENTION RATIO 63.94 59.76 29.56 39.86

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Following is the table showing growth of the Sun TV network over the 5 years.

The Sun TV Network stock may have come off its all-time high of Rs 1,077 reached in
January this year, but a revival in advertisement revenue growth, coupled with digitisation in
Tamil Nadu, points to higher growth rates for the company in the next two years.

According to analysts, given the improving business outlook and promoters, including
Kalanithi Maran, managing to clear legal issues, the stock correction could be a good entry
point for investors.

The company entered into a high-growth phase in the December 2017 quarter (Q3).

Sun TV’s net profit during the reporting quarter grew 11 per cent to Rs 2.66 billion from Rs
2.40 billion a year ago. It was below analysts’ expectation, as the bottom line was hit by a
higher movie amortisation cost of around Rs 960 million, even as its earnings before interest,
tax, depreciation, and amortisation (Ebitda) were in line with estimates.

An increase in cost of programming and content, too, impacted profit. The cost moved north
due to a transition from slot-sale to a more stable commission-based model. Sun TV indicated
that the split would be 50:50 in terms of private producers and commissioned programming.
The latter’s share is 20 per cent at present. The double-digit growth in Q3 profit comes after
three consecutive quarters of single-digit increase in earnings figures.

Revenues were up 15.9 per cent year-on-year (y-o-y) at Rs 6.83 billion, aided by higher-than-
expected advertising revenue growth. Advertisement and broadcasting revenues grew 19 per
cent (core advertisement growth of 21.6 per cent y-o-y). Subscription revenues grew 16.5 per
cent y-o-y to Rs 2.81 billion.

Ad revenue, digitisation to drive growth:

Of the total TV advertisement market of Rs 188 billion, the southern region constitutes Rs 40
billion. Of this, Tamil Nadu accounts for 45 per cent, and Sun TV claims 45-50 per cent of it.
The company expects healthy growth in advertising revenues in the coming quarters.
“Double-digit growth (an advertisement revenue) is fairly reasonable as big national
advertisers are back. Focus on strong fiction-led content should drive rating-led
advertisement growth,” an analyst said.

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 COMPETITORS ANALYSIS:

Top competitors of Sun TV are:

Jaya Tv is the biggest rival of Sun TV. Jaya Tv was founded in 1999, and its headquarters is
in Chennai, Tamil Nadu. Jaya Tv operates in the Movies & Entertainment industry. Jaya Tv
has 1,874 fewer employees than Sun TV.

Polimer Media has been one of Sun TV's top competitors. Polimer Media is a Private
company that was founded in , in null. Polimer Media competes in the Movies &
Entertainment industry. Polimer Media has 1,909 fewer employees vs. Sun TV.

Raj group of channels is Sun TV's #3 rival. Raj group of channels was founded in null in
Chennai, Tamil Nadu. Raj group of channels is in the Publishing industry. Raj group of
channels generates $467.2M less revenue than Sun TV.

Against the backdrop of increasing competition in traditional markets in the South, including
Tamil Nadu, from newbies such as Colors Tamil, Zee, and Star, among others, Sun TV is
taking steps to secure its market pie and expand geographically.

Sun TV, the flagship channel of Sun Network, garnered over 60 per cent viewership in 2016.
The share has now come down to 47-48 per cent. The management said while Sun would
work to maintain its leadership by tweaking strategies, including launching shows, it would
also chase its competitors’ markets.

Sun’s Gemini TV (Telugu) ratings improved to 24-25 per cent in the last couple of months
following a content rejig. The Kannada GEC channel, Udaya TV, too, improved its ratings to
17-18 per cent from 11-12 per cent. The only weak link is the Malayalam genre where the
share of Sun’s movies channel has come down to 16-17 per cent from 20-22 per cent.

There are concerns over rising competition with the launch of Colors Tamil and aggressive
content strategy by Star and Zee in the Tamil genre. However, Sun’s leadership and
understanding of the Tamil market offered the company a competitive edge, said ICICI
Securities. Yet, this is one area the Street will watch out for.

Sun, sitting on Rs 17-billion cash and cash equivalents, plans to invest in content, OTT (over
the top) and in market expansion. The management said the company was looking at entering
one new market in FY19.

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 THE ROAD AHEAD
Sun TV’s shift to a commission-based model from private programming should potentially
offer about 20 per cent higher Ebitda and capture the potential upside from limited
undercutting and better content ratings.

Besides, Sun TV expects to benefit from its Ebitda margin from FY19 onwards, owing to the
Indian Premier League licence fee, obligation being reduced to 20-25 per cent and revenue
nearly doubling to Rs 2.8 billion due to higher auction of media rights. Analysts expect the
company’s earnings to grow at over 20 per cent each in FY19 and FY20.

GROWTH AREAS
 Regional entertainment is growing and therefore, the suppliers are able to expand
their forte in the products.
 The South Indian television industry is one of the oldest operational television sectors
across the nation and is further growing due to the regional content.
 Increasing digitisation in the country is helping such companies to further add up to
their revenues.
 As television industry is a dominant segment in the entertainment industry even the
film makers promote their films at this platform so as to reach to the mass audiences
for example the reality shows, TV advertisements, etc.
 Apart from the impact of rising incomes, widening of the consumer base will also be
aided by expansion of the middle class, increasing urbanisation and changing
lifestyles.
 The Sun TV Network will also benefit from continued rise in the propensity to spend
among individuals; empirical evidence points to the fact that decreasing dependency
ratio leads to higher discretionary spending on entertainment.
 Traditionally only advertising has been a key source of revenue for Media and
Entertainment industry, but off late revenue from subscription and value added
services has also contributed significantly. With consumers willing to pay for content
and extra services, the subscription segment will play an important role in the post
digitisation era.

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 CONCLUSION
The above analysis leads to a conclusion that SUN TV has maintained its market share and
revenue in its sector and is among the top corporates in this industry. Sun has built up a large
library of around 2,600 films, in Tamil and Malayalam, which has helped it retain its prime
position. Besides, it continues to buy rights for films. Industry watchers believe that the pay
TV opportunity in Tamil Nadu and Kerala is large and will increase with the arrival of new
platforms like DTH. Also the market share and the revenues generated are the major
strengths keeping it on a fast track of growth and success.

Sun Network operates in an intensely competitive industry. The competition and increasing
prices may adversely affect the ability to acquired desired programming and artistic talent.
Also it dominates in the south and has not yet made a mark in the entire country.

The ever evolving technologies in television open more opportunities and challenges. The
industry is ready to zoom at a very fast pace catalyzed by many factors like convergence of
media, films, digital media and increase in broadband penetration thus helping it to become a
front runner. The fact that significant households of India are still without television
connectivity highlights the scope of growth in the segment. The majority of the revenue
generated in the television industry is through advertisements followed by subscription.
Strong growth projected in DTH segment would result insubstantial increase in subscription
revenue over the years to come. Increasing interesting regional content among Indian
population across the borders, results in increased overseas viewership thereby attracting
foreign investment. Radio broadcasting in India which is still in its infancy is evolving to be a
revenue spinner in the coming years.

Technological failures could adversely affect the business. Advertising income continue to be
the major source of Sun Network revenues, which could decline due to a variety of factors.
The commercial success of Sun Network depends on our ability to cater to viewer
performance and maintain high audience shares which could be affected.

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 REFERENCE
 http://www.suntv.in/pdf/Finance/Annual-Report-2018.pdf
 https://www.moneycontrol.com
 https://www.ibef.org/download/Media-and-Entertainment-February-2018.pdf
 https://en.wikipedia.org/wiki/Sun_TV_(India)
 https://www.mbaskool.com
 https://www.equitymaster.com

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