Updated: Media And Entertainment Industry To Consolidate; Revenues To Double By 2010

Updated below
According to a Credit Suisse report, India holds significant opportunity for global media and entertainment companies in the medium and long term. Why?
– Consolidation: market cap of even listed media companies in India is but a fraction of US media companies; acquisitions in the offing.
– Well developed content distribution systems and advertising models
– Favourable regulatory environment, as opposed to China
It seems the usual suspects hold opportunities for media and entertainment companies – the BRIC countries…total consumption of media will depend on the number of consumers. News Corp, Sony and Walt Disney are set to be best positioned to make most of the opportunity in India, given the acquisitions that they have made. There is tremendous opportunity in consolidation.

Another report, this time by Crisil, predicts that Media and Entertainment revenues will by double by 2010, growing annually at 15.6 percent. It is estimated that the revenues will hit Rs.744bn by 2010.
Crisil Research Head Nagarajan Narasimhan believes that growth TV and Radio will be most impressive…I’m not too sure about TV. Changed business models will be key, since “In television, we expect the balance of power to shift in favour of broadcasters with the adoption of alternative distribution platforms such as DTH, CAS and IPTV.”

For TV, maybe a change in programming is in order…so much of it is unintelligent and ‘sold out’ that it borders on being insulting. Come to think of it, this is one of the factors driving Internet usage…the freedom to choose. For radio, differentiation of content would be a pleasant change. Else, there’s always Internet radio.

Update:
Credit Suisse believes that News Corp, Disney and Sony are best positioned among global media companies to make the most of opportunities that the Indian market has to offer:
– Disney: has equity investments in UTV, 50% of JV with News Corp’s STAR Sports, 14.9 percent investment in UTV, recently acquired Hungama TV (a kids channel). Expected to get 50% of advertising in kids space in financial year 2007.
– Sahara One: fourth largest player and has divested 30% stake so far (14.9 percent to Siva and 6 percent to Times of India). Expected, expected to divest another 19 percent stake.
– Sony Entertainment Television: owned 61 percent by Sony Pictures, 31 percent by Indian shareholders and 8 percent by Capital Group. An IPO or a change of ownership is on the cards so the Indian shareholders can exit. Content is focused on reality programming, targets a much younger audience than its competitors; has higher cost of programming. Distributes Discovery and Viacom channels.
– STAR/News Corp – leading broadcaster, with stakes across the media and entertainment space. GRPs double that of Zee and almost four times that of Sony. Presence in both Internet and Mobile domains.
– Sun TV: has four radio stations, 41 radio licenses, and is the largest regional broadcaster in south India. Has recently become a pay channel and plans to increase advertising rates.
– UTV: owned 14.9 percent by Disney, with operations in TV and Film production, Animation and broadcasting. Recently bought controlling stake in Indiagames.
– Zee TV: India’s largest listed company, splitting up into separate entities of TV broadcasting, Cable, DTH and TV News. Content strategy seems to be focused on regional language channels.
There are regulatory restrictions on ownership of news channels, newspapers and radio at 26 percent, but entertainment is up grabs. India offers twice the monthly ARPU than China at lower number of TV owning households, but greater cable distribution. Piracy, however, restricts the growth of home entertainment. The film production industry is gradually being corporatized. Credit Suisse expects increased participation from Viacom, Time Warner and Discovery. The report, however, does not take into consideration the political situation in the country, which can easily change the situation dramatically.
Download the full report here.

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