Shares of Kalanithi Maran controlled media firm Sun TV surged today after it signed an agreement with the Tamil Nadu Arasu Cable TV Corporation, which is the state-run cable television services provider in Chennai, to distribute its bouquet of channels.
Arasu Cable TV provides signals to cable operators in Tamil Nadu, to distribute its channels. This agreement will strengthen the reach of company’s network as it will be able to offer its channels on all cable TV distribution systems run by Arasu Cable across Tamil Nadu with immediate effect.
The stock closed 1.72 percent higher at Rs 263.35 on the Bombay Stock Exchange after jumping 4 percent in morning trade.
Sun TV will now earn additional subscription revenue from Tamil Nadu but the management has not quantified a specific amount by which the company is expected to benefit. The Kalanithi Marna-promoted company was suffering a loss of Rs 10 crore per month because it was not available on the Arasu Cable platform, whose subscriber base has grown ten times in the last six months.
The new arrangement will “facilitate in further enhancing the competitive positioning’’ of the network’s programmes and it will also earn additional subscription revenue in the State.
The deal is expected to improve the subscription revenue from the domestic analogue markets in Tamil Nadu and help arrest the decline in TRPs providing better support for ad growth, said ICICI direct in a report today.
The brokerage has maintained a buy rating on the stock with a target price of Rs 300. However ICICI cautions the recent CBI charge sheet against the Maran brothers may remain an overhang on the stock.