The past decade has seen the advent of many international companies with a keen interest in Indian media, whether film production, radio, television or print. The first to ride the bandwagon was Rupert Murdoch's NewsCorp with the television network, STAR India.
At the 10th FICCI Frames convention in Mumbai, one of the panel discussions deliberated on the attractiveness of the Indian media and entertainment business for investors. Participating in the discussion were eminent industry persons -- G Krishnan, executive director and CEO, TV Today Networks; Rajesh Kamat, CEO, Colors; Monica Tata, deputy general manager and vice-president, Entertainment South Asia, Turner International India; and Peter Smith, president, NBC Universal.
the discussion was Rajesh Kamat, who has to his credit the successful launch of the Hindi general entertainment channel, Colors, the product of a joint venture between Viacom and Network 18. He presented a clear picture of the Indian media and entertainment industry.
Kamat stated that mass media in Indian reaches out to 60 per cent of the population, implying that the remaining 40 per cent is media dark. Another statistic which, according to him, was indicative of the country's growth was the advertising to GDP ratio. The average in India is 0.5, while the global average is 1.
Kamat also had some advice for those who want to enter the industry. The factors prospective entrants should consider include debt versus equity; whether the investment is through the company's money or through borrowed funds; whether it is cheaper to build or buy and if it is the latter, what kind of stake should be bought; and the focus of being in the top three. Another key factor to be determined is the risk appetite - how long an entrant is willing to wait for the returns. Ideally, a period of three to five years is a good time to break even, he said.
Time Warner has identified India as a potential growth market in its global scheme. "Time Warner's commitment is evident with its launch plans in India. We have just launched a Hindi entertainment channel, Real, and will also soon launch an English entertainment channel," she said. "Longer-term goals, and not quick ROI, are what pay in the long run," she stated. However, she also said that it is unlikely that there will be a flurry of investments in 2009.
Talking about investments, G Krishnan recalled the days when TV Today
Krishnan added that one major hindrance in investing in niche offerings is the faulty addressability system. Growth shouldn't just come from advertising revenue; it should come from subscription revenue as well, which lies untapped. "If digitisation happens in full force, we would look at launching niche channels - cooking, gardening, health and so on - like in other parts of the world, for specific audiences," he says.
Providing an outsider's perspective on the Indian media and entertainment industry was Peter Smith. He described the Indian market as being encouraging to foreign investment and a good regulatory environment. NBC Universal has invested in NDTV Networks and is a local television production and film production company.
When asked if this was a good time to launch considering the downturn, Tata replied in the affirmative. "Our offering is differentiated; we have a long-term perspective on the business and have complete belief in our plan. It's about how you evaluate your business plans," she said. Meanwhile, Krishnan said, "We're not struggling like the rest of the world. We will do well if we put our money in the right places."