Robust ratings growth gives further credibility to our view that QYOU Media Inc. (TSXV:QYOU) is a strong acquisition target
SmallCapPower | April 12, 2021: QYOU Media Inc. (TSXV:QYOU) announced that viewership of The Q India grew by 295% over the prior eight week period. The robust ratings growth gives further credibility to our view that QYOU is a strong acquisition target.
The Q India viewership explodes to a new high. Q India’s linear TV channel achieved impressive viewership growth over the past eight weeks from BARC ratings (considered India’s equivalent to Neilson). Gross rating points grew by three times to 13.02 from 4.4, eight weeks prior. The significant growth is yet another milestone record for the company in 2021. The Q India’s gross rating points are now double those of competing Millennial and Gen Z channels such as Bindaas (Disney), MTV, and Zoom. Impressions, which grew to 75.2 million, are also more than double those of MTV and Disney. Average time spent viewing remained 50% to 150% higher than its peers. This continues to showcase the strength of The Q India’s 300+ content partners who produce content on a wide variety of topics including travel and leisure, comedy, cuisine, celebrity gossip, and mini serials. Additionally, with strong distribution via apps like Chingari (Indian TikTok) and Jio, The Q India can monetize its viewership through influencer marketing and advertising sales. Recall in January, we wrote a note on QYOU’s announcement of $200K in advertising contracts from notable Indian and international media, healthcare, and CPG companies such as Airtel, Reckitt Benkiser, Britannia, and SBS Biotech.
The strong growth in The Q India’s numbers gives further credibility to our view that QYOU Media is an excellent takeover target for media companies looking for access to Indian Millennials. Indian and U.S. Media companies such as Viacom, Bindaas (Disney), and Time Warner are looking to capitalize on the market for Indian Millennials. With numbers that are quickly outpacing the growth of their own brands, we believe that QYOU could be acquired by a larger media company to tap into the lifetime value of QYOU Media’s unique content partners and Millennial audience.
Cheddar’s VC financing rounds and purchase by Altice, illustrate the premium media conglomerates are willing to pay for a well-established millennial brand with strong growth potential. Cheddar Inc is a Millennial-focused digital news network, dubbed the “CNBC for Millennials.” Cheddar focuses on business news and headlines, and is available through over-the-top devices (online, SmartTVs, tablets, phones, etc), with 19 hours of programming per day. Altice USA is one of the largest broadband communications and video services providers in the United States, delivering content to 4.9M residential and business customers.
Cheddar’s valuation increased by 13-fold from its Series A to its takeover by Altice. Cheddar is the best comparable transaction based on the target demographic, similar distribution channels, and device reach. Cheddar raised ~$55M in funding across four venture financing rounds with an average premium of ~100% for each round. Cheddar was acquired by Altice in August 2019, at a 25% premium over its Series D round. QYOU Media with an even larger distribution reach in India (~1B combined), similar demographics (Millennial/Gen Z Indians 20-30 years old), and existence in an emerging market with M&A growth expected to outpace that of the United States, lead us to believe that QYOU could be a prime acquisition target.
Valuation
QYOU has the potential for a premium takeout multiple. The Q India, if purchase by a media conglomerate, could receive a substantial premium to the average takeout multiple in our M&A table (5.4x EV/Sales+). Historically, companies focused on youth programming have received premium takeout multiples from large media companies looking for growth. The Q India now has ratings that are more than double those of its main competitors (Disney, Viacom, Time Warner) own brands. Over the past six months, The Q India’s ratings have increased by over 500%. Comparatively its closet competitor, MTV, saw their ratings increase by 23%, while the other players Bindaas and Zoom saw their ratings decrease by 25% and 17%, respectively.
Company Description
QYOU Media Inc. is a media company focused, via its 88% owned subsidiary QYOU Media India Pvt. Ltd., on ‘Young Indians’ being the approximately 400M 20 to 30-year old’s who are a subset of the Millennial and Gen Z market in India. QYOU Media produces ‘The Q India’, a Hindi-language television channel with a growing VOD content library, with over 800 programs and counting, that is now available to approximately 610M users via 55M television homes with partners including TATA Sky, Airtel DTH & SitiNetworks; 355M OTT users via platforms including MX Player, ZEE5 and Dish Watcho; and 200 million users on mobile and digital platforms including JioTV, Airtel Xstream, SNAP and Chingari.
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