Corporate Presentation August 2010
Network18 - India s Fastest Growing Media Conglomerate One of India s leading professionally owned and run media conglomerates Operate the country s leading brands in Entertainment, General and Business News, Internet, Films, Yellow Pages and Home Shopping Over the last two years, the group has organically created the country s leading entertainment network led by India s leading GEC, Colors Excellence in execution with an unmatched track record of creating market leaders Renewed focus on profitability after successful conclusion of investment phase Recent re-alignment has aligned the Group for synergy, simplified the structure, infused clarity in business models and will result in two focused listed entities Led by a highly experienced and professional management team Partner of choice for global media giants: Viacom, NBC (CNBC), Time Warner (CNN) & Forbes 2
Leadership Position Across All Media Platforms #1 Hindi GEC #1 Youth & Music Television #1 #1 Business News Business News (Hindi) #1 #1 Kids International / Entertainment #1 English News #1 HomeShopping Film New Age Motion Pictures Print #1 Yellow Pages & Local Information Web #1 Business Portal #2 Horizontal Portal 3
Re-alignment Simplifies Structure, Amplifies Synergy Promoters 56.81% Network18 (Listed) Yellow Pages/Magazines Web18 Events 18 Sports18 DEN & Yatra 58.26% New TV18 (Listed) Homeshop18 51% Capital18 100% Newswire18 70% 50% Viacom18 SetPro18 66% TIFC (1) Infomedia18 (Press) (Listed Held for sale) 48% 50% 100% IBN Lokmat Sun18 North Notes: (1) TIFC transaction envisaged not completed 4
New TV18: Integrated TV Company Reaching Over 300 mn People Business GEC New TV18 News Youth Children 5
New TV18: Vertical Integration into Pan-India Distribution NEW CHANNELS (OWN & 3 RD PARTY) Sun18 will distribute a total of 33 channels (10 of Network18 + 20 of Sun + 3 of Disney) across platforms on an all India basis; plans to add other channels 6
New Network18: Digital, Ecommerce and Publishing Assets Digital Publishing New Network18 E Commerce 58% Investments Emerging New TV18 7
Network18 is Well Positioned Across Media Platforms Company Television Print Films Home Shopping Digital Legend Leadership Position Strong Challenger Market Presence Niche Presence Presence across all media platforms coupled with leadership position in in 3 platforms 8
Digital Assets: India s Destination of Choice Business Portal Local Search World s 3 rd largest business portal 2 nd largest Indian website Local info platform Premier end-to-end business and finance destination for Indians all across the world 5 mn + unique users / month Leading general interest destination which is now the gateway to the web for Indian internet users 8 mn unique users / month Leading local information & search platform Covers 74 cities in India; 3 mn businesses listed already E-Commerce Leading websites for travel bookings, entertainment and B2C e-commerce Mobile 51818 Provides content and applications such as WAP sites, Mobile Applications and SMS & Voice services Comprehensive Portfolio of Internet and Mobile Assets 9
Publishing: Building on Yellow Pages & Magazines Leadership Yellow Pages Magazines Print Auto Business Engineering #1 with 40% market share 3 mn copies distributed annually in 26 cities Reach of 1.5 mn businesses across 1,500 categories Photography Computer Gadget B2B Search India s leading portfolio of Industrial Directories, Office Directories, Exporters Guides and Construction Guides India s largest B2B publisher Leader with 20 magazines Readership of 1+ mn 10
HomeShop18:Leveraging the Indian Retail Opportunity On Air and Online Shopping Destination Robust Infrastructure 24 hour in-house call centre Deliver to 2,750 towns One of The Largest Selection of Products and Brands Under One Roof 11
Investments: Stakes in High Potential Businesses Media & Entertainment Education Leading MSO and Digital Cable Provider Colosceum: Content provider for multimedia platforms Technology-enabled education service provider Film exhibition Corporate training & higher education to individuals New Media Consumer Electronics Leading Online Travel Portal IP driven MVAS player Consumer electronics leader in digital channels India s No 1 Digital Agency and Ad Network Investment of $4.3mn in in DEN Valued at at $44mn Today 12
Network18: Rapid Growth in Partnership with Global Giants Managed Revenues* (USD mn) Global partnerships across media platforms Leading global entertainment content company World's leaders in news and information delivery 470 CAGR 83% 350 50:50 JV for GEC/Youth/Kids/Music Partner in English news 174 Recognized world leader in business news World s leading business magazine 73 23 35 Partners in business news Partners in business magazine publication * Managed Revenues: Total revenues managed by the group without adjustment for ownership 13
Growth so far driven by Advertising Revenues; Significant Subscription Opportunity Ahead 14
Existing Subscription Opportunity US$ 4 Bn Market Today Broadcasters % Share of Sub Revenue (1) (1) Broadcasters 13% LCO s / Leakage 74% MSO 13% Immediate Subscription Revenue Opportunity All Values in Rs Cr Pro forma FY10 Ad Revenue Subscription Revenue Total Revenue Zee+ZNL (2) ~1,500 ~1,050 2,725 NEW TV18 ~1,200 ~120 1,330 NEW TV18 as a % of Zee+ZNL 75% 11% (1) Numbers include international sub revenue; Break up of Broadcasting revenues only (2) Zee financials are on a reported basis, New TV18 financials are on a managed basis 15
Sun18: Monetising the Subscription Opportunity Objective Channels Distributed Create first truly pan-india distribution company Become one of the dominant players in the pay TV subscription market Network18: 10 Channels Sun Network: 20 Channels Disney: 3 Channels Highest GRP Delivering Bouquet In India Platforms / Market All platforms including cable, DTH, IPTV, HITS and MMDS All India Market Structure 2 new companies being formed Sun18 Media Services North Co. Sun18 Media Services South Co. India s Best Media Team Network18: Haresh Chawla, Rajesh Kamat Sun TV: Tony D Silva 16
Substantial Growth in Subscription Market Ahead DTH Subs in Mn 6 players with deep pockets DTH Driving Digitization 32 25 58 Actual Subs 64 67 Projected Subs Regulatory Push Likely to Further Increase Penetration Recent Recent TRAI TRAI Tariff Tariff Order Order mandates mandates addressable addressable system system service service providers providers (DTH, (DTH, IPTV, IPTV, HITS, HITS, Digital Digital Cable) Cable) to to provide provide pay pay channels channels on on an an a-la-carte a-la-carte basis basis post post Jan Jan 1, 1, 2011; 2011; additionally, additionally, minimum minimum monthly monthly subscription subscription not not to to exceed exceed Rs Rs 150 150 Above Above moves moves likely likely to to reduce reduce prices prices and and incentivize incentivize digital platform adoption digital platform adoption Digitization Improving Broadcasters Negotiating Position Broadcaster Share Expected to Double by 2013 No bandwidth / channels constraint in the digital No bandwidth / channels constraint in the digital platforms platforms Ability to control access to content Ability to control access to content 2.0x Carriage fees stabilizing / reducing on the analog side Carriage fees stabilizing / reducing on the analog side 17
Key Financials
Network18 Consolidated P&L - Quarterly By Business Income from Operations (INR Cr) EBITDA (INR Cr) 399 4 278 370 318 (14) (52) 2 1 227 Notes: 1) Others includes Setpro18, Events & Sports Management and Advisory Services revenues besides adjustments for inter-company revenues 2) IBN18 revenues have increased in Q2 FY10 on account of consolidation of 50% of Viacom18 financials (compared to 33.71% consolidation in Q1) 3) Conversion rate of 1USD = 46INR used across all quarters 19
New TV18 Pro Forma P&L - Quarterly By Business Income from Operations (INR Cr) EBITDA (INR Cr) 261 253 237 26 25 21 202 (29) Notes: 1) Management Accounts - Not Audited 2) Viacom18 Numbers Reflect 50% New TV18 Shareholding 20
New TV18 Pro Forma Balance Sheet Balance Sheet (STANDALONE) FY2010* Pro Forma Sources of Funds 1,218 1,445 Equity 924 842 Debt 293 603 Application of Funds 1,218 1,445 Fixed Assets (Net Block) 75 151 Investments 465 469 Cash & Equivalents 405 507 Net Current Assets 85 218 P&L A/c 188 100 Metrics Net Debt (111) 96 Debt/ Equity 0.32 0.72 Net Debt/ Equity -0.12 0.11 (Net Debt NCA) / Equity -0.21-0.14 All Values in Rs Cr Viacom18 * Assumes completion of rights issue 21
Network18 Consolidated P&L - Annual (Extract) All Values in INR Cr Year ended 31.03.2007 (Audited) Year ended 31.03.2008 (Audited) Year ended 31.03.2009 (Audited) Year ended 31.03.2010 (Audited) INCOME Income from operations 338 648 760 1,265 Other income 18 44 136 161 Total Income 357 692 896 1,426 EXPENDITURE Production, administrative and other costs 209 349 659 978 Personnel expenses 100 179 302 316 EBITDA 30 120 (201) (28) Interest and financial charges 36 90 185 213 Depreciation, Others 25 49 84 196 PBT (13) 25 (335) (277) Profit/(Loss) after tax after minority interest (10) 5 (182) (134) Revenue CAGR of 55%; investment phase over, last 3 quarters have been profitable at at an EBITDA level 22
Network18 Consolidated Balance Sheet (Extract) All Values in INR Cr As at 31.03.2007 As at 31.03.2008 As at 31.03.2009 As at 31.03.2010 (Audited) (Audited) (Audited) (Audited) SOURCES OF FUNDS 1,090 1,939 2,403 4,355 Equity 371 436 653 1,527 Debt 470 1,087 1,388 2,112 Minority interest 249 416 361 716 APPLICATION OF FUNDS 1,090 1,939 2,403 4,355 Fixed assets (net block) 158 235 301 560 Goodwill (on consolidation) 127 354 721 1,252 Investments 101 314 711 406 Cash & Equivalents 446 758 341 1,251 Net current assets 248 191 125 553 Profit & Loss 10 87 204 333 Net Debt (net of cash equiv) 24 329 1,047 861 Debt / Equity 1.27 2.50 2.12 1.38 Net Debt / Equity 0.07 0.75 1.60 0.56 (Net Debt NCA) / Equity -0.60 0.32 1.41 0.20 23
The Valuation Gulf Amount in Rs Cr ZEE ENTERTAINMENT NETWORK18 FY09 FY10 FY09 FY10 Financial Performance Sales 2,177 2,197 760 1,265 % Growth 1% 66% EBITDA 548 609 (201) (28) EBITDA Margin 25% 28% -26% -2% Net Profit 512 456 (182) (134) Market Data Market Cap 14,276 1,626 Net Debt 383 861 EV 14,659 11% 2,487 Share Price (Rs) 296 142 Market Multiples EV/Sales 6.7X 2.0X P/E 29 NA PS: Zee has 1,000 Cr+ of sub revenue leading to 500 Cr+ EBITDA; Viacom18 is profitable on ad sales alone unlike Zee 24
Summary Fastest Growing and Most Diversified Media Company Unmatched Collection of Market Leading Brands Restructuring has Simplified Structure, Clarified Business Model Recent Results Demonstrate Profitability Focus Strategic Alliance With Sun to Help Monetize Large Subscription Opportunity Uniquely Positioned to Benefit from Industry Growth Potential 25