Media shares, including of channel broadcasters and multi-services operators, are seeing a bout of bargain hunting, ahead of the implementation of conditional access system in the four metros from July 14.

On Thursday, media major Zee Telefilms' stock gained 8.08 per cent to Rs 86.25 on renewed buying support.

The stock has gained 23.30 per cent from its recent low of Rs 69.95 on April 28.

The Sri Adhikari Brothers' stock has gained 3.00 per cent to Rs 75.15 on Thursday, but up 33.33 per cent from its recent low of Rs 50.10 on April 28. Jain Studios, ETC Networks, Padmalaya Tele, Saregama and Balaji Telefilms each have gained in a range of 20-25 per cent.

Vinod Kumar Sharma, vice president (head of research) at Anagram Stockbroking adds, "Until now, the highly fragmented cable industry has been plagued by the ills of under-reporting by local cable operators, who control the last-mile connectivity to the estimated 40 million cable & satellite households in the country."

Pankaj Bhandhari, a media analyst with local brokerage house, adds: "Over 26,000 LCOs spread across the country have been blatantly under-declaring the subscriber base to MSOs and pay channels and pocketing the bulk of the revenues. The magnitude of the damage can be gauged by the fact that the broadcasters barely garnered 7-9 per cent or Rs 700-750 crore (Rs 7-7.5 billion) of the total estimated revenues of Rs 9,500 crore (Rs 95 billion) generated by the cable industry during the last fiscal."

Moreover, the government also lost about Rs 700 crore (Rs 7 billion) of revenues in the form of entertainment tax.

But this could change drastically with the implementation of CAS regime.

Conditional Access is a technology that is used to control access for pay television services to authorised users by encrypting the transmitted signal. MSOs, rather than the LCOs, will control the billing under the CAS regime, thus eliminating the under-declaration.

Media analysts point out that a proper implementation of CAS could lead to a near 100 per cent declaration by LCOs in the next 18-24 months.

This effectively means an exponential jump in pay revenues for broadcasters such as Zee, Television 18, ETC Networks among the listed companies.

For instance, Zee might get pay revenues from 20 million C&S homes (considering about 50 per cent C&S homes opt for the Zee bouquet) by 2004-05 instead of the pay revenues of Rs 131.8 crore (Rs 1.318 billion) from 4.6 million households reported in the fourth quarter of 2002-03.

The additional revenues will more or less get reflected directly in the bottomline.

Even MSOs like Siti Cable (part of Zee group), Hathaway (Raheja group), INCablenet (part of Hinduja TMT) stand to gain as the cable distribution business is expected to consolidate further due to the implementation of CAS.

Eventually, the cable industry will get polarised towards few large regional and national level operators.

Besides, the improved declaration by LCOs will also benefit the MSOs as their share of the total revenue pie will increase significantly.

However, the MSOs will have to incur large investments to install conditional access and billing systems at their head-ends.