Toronto-based JumpTV is taking advantage of two massive market trends, adoption of broadband allowing for broadcast of TV over the Internet, and global migration which is expanding ethnic populations in markets around the world.
The company is at the cusp of an exciting future as the leading provider of ethnic television, delivered over the Internet. As such, JumpTV (JTV) stock could have plenty of upside ahead.
JumpTV uses Internet protocol television to give immigrants their favorite shows from back home. 254 channels in 70 countries have exclusively licensed their content, including live cricket matches from Pakistan, UEFA Cup qualification football matches from Europe, and news from Arab channel Al-Jazeera – to JumpTV’s paying subscribers, mainly in North America and Western Europe. Ethnic minorities in these regions make up a market of at least 80 million people.
With a subscriber base of about 30,000, JumpTV is still at an early stage of market development. But Bay Street analysts reckon its subscriber count could grow to over half a million by 2008. That could push revenues as high as $50 million from just under $5 million today.
The company now has the resources to move forward with aggressive market expansion. In the latest quarter, JumpTV had nearly $54 million in cash in hand. Another $117 million raised this month on the TSX and the London AIM market will be used to fund more TV content deals, further technology development and worthy strategic acquisitions. What’s more, the company is debt free.
The company is expected to spend about $2 million in cash per month on marketing and technology development. Although it has yet to produce earnings, EBITDA break-even is projected for the end of 2008. Bottom-line profitability seems eminently doable by 2009.
Right now, JumpTV is the leader in live Internet streaming of broadcasts from TV stations around the world. The next phases in its service offering will include pay-per-view, video-on-demand, music subscriptions and social chat forums. These initiatives should help to expand subscriber numbers.
Strong, experienced management should give investors confidence in JumpTV’s plans. and CEO G Scott Paterson was listed as one of Newsweek magazine’s 17 people to watch in 2007. During his six years at the helm of Yorkton Securities, the investment bank’s revenues grew from $60 million to $244 million. Meanwhile, COO Isaza Tuzsman has run and successfully sold several emerging technology companies.
Of course, the stock is not without risk. Management now has the job of securing advertising revenues and ensuring its marketing is successful, not to mention tying up enough unique TV content to keep it ahead of more established cable and satellite TV competitors.
Nonetheless, this is a stock to keep an eye on. JumpTV has a first mover advantage in the deployment of Internet TV to mainstream audiences. As the company’s Internet TV offerings grow in popularity in big and growing ethnic markets around the world, the shares could see sizable appreciation over the long term.
