Media Nusantara Citra (MNCN)
Supreme Court Makes Decision On TPI
The Supreme Court has ruled that Siti Hardiyanti Rukmana is able to reclaim TPI, which has been renamed MNC TV and is now a Media Nusantara (MNCN) subsidiary. In the worst-case scenario, if MNC TV is taken out of MNCN, the latter’s FY13/14F earnings could decline by 4.7%/13.8% to IDR1.8trn/1.9trn respectively. We cut our TP to IDR2,750, implying 20.6×-19.6x FY13-14F earnings. Maintain NEUTRAL.
• Loses TPI (now MNC TV) case. After a long process, Siti Hardiyanti Rukmana is finally able to reclaim Cipta Televisi Pendidikan Indonesia (TPI) from Hary Tanoesoedibjo the former owner of Berkah Karya Bersama (BKB) which owned TPI.
• Prior to this, BKB’s ownership was transferred to MNCN. The Supreme Court judged that the latter’s taking over the television station, which was subsequently renamed MNC TV, was unlawful. Once completed, the grounds of judgement for granting an appeal (which is being drafted) will be published in the Supreme Court directory and a certified copy will be sent to the parties involved.
• Impact on MNCN revenue. Based on MNCN’s 1H13 results, revenue from advertising accounted for around 92% of its consolidated revenue. However, there was no breakdown of revenue contributions from MNCN’s three television stations. As of June 2013, MNCN’s total audience rating was 42.7%, while MNC TV’s audience rating was 14.0%, the second largest audience share. In the worst-case scenario, if MNC TV is taken out of MNCN, we see the latter moving the station’s popular programmes to Global TV, which has a lower audience share of 5.8%. That way, MNCN should be able to maintain some of MNC TV’s audience albeit at the expense of losing some of Global TV’s.
• Lower estimates and TP. We cut our FY13/14F revenue estimates by 4.6%/13.7% to IDR6.9trn/7.3trn on the back of lower advertising revenue to reflect a decrease in Global TV’s audience. We also lower our FY13/14F earnings estimates by 4.7%/13.8% to IDR1.8trn/1.9trn. Our new TP is IDR2,750, implying 20.6-19.6x FY13-14F earnings. MNCN’s share price fell by 10% yesterday, weighed down by the Supreme Court’s decision. Maintain NEUTRAL.