<FONT COLOR="#FF0033"><B>FICCI Frames ’06:</B></FONT> Financial investors take a call on entertainment industry

At the session on ‘Financing Options for Indian Entertainment’ at FICCI Frames 2006, Vikram Narula, partner, GW Capital, said, “As far as the entertainment industry is concerned, a large part of the investment goes to the listed companies.”

Narula pointed out that media and entertainment companies compete with the healthcare and IT sectors. He added, “Going forward from there, some of the sectors that will infuse maximum capital are broadcasting (both television and radio) because of its scalability and sustainability, then print, and some last-mind businesses such as exhibitions, the cable business, studio infrastructure, post-production companies, live entertainment and theme parks.”

In the existing funds scenario, some of the sectors that will really catch the investor’s eye are film exhibition, print, radio and DTH.

Narula said that companies should also look into diversifying into multiple segments as that usually helps in generation revenue. To elucidate his point, Narula picked up the examples of UTV and Nimbus.

However, Ashok Wadhwa, MD, Ambit Corporate Finance, said “Today, media companies lack capital because of their poor performance over a considerable period of time. These companies lack credibility due to under-performing assets.”

“Therefore,” he said, “some of the regulations pertaining to media vehicles such as radio should be revised. If they can set up television channels, then why are foreign investors being stopped from spending in radio?”

Wadhwa pointed out that India was a price sensitive nation and tax rates should be reduced across all businesses. He said, “This will have a direct impact on price, which influences demand and supply.”

In conclusion, Wadhwa said that in order to generate more money in the entertainment industry, creative minds need to work together. However, he admitted that such a concept would be hugely impossible to implement. But in order to attract private equity investors, creative people need to understand fiscal needs if only to save the industry from this dearth of capital.

© 2006 agencyfaqs!