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TV.NXT: Why are acquisitions rare in Indian TV business?
Experts deliberated on why acquisitions are rare in the Indian television space and the impediments faced by the industry
The television industry in India, while seeing new launches by broadcasters, hasn't been in the news lately for news related to acquisitions. This - even when the Indian television market is fragmented across production, broadcasting and distribution. Besides the clutter in the market, there are a lot of individual companies which are low on profitability.
Besides, he said at that stage, it becomes difficult due to another parameter. Since these branded assets are promoter-driven, decisions are centralised. Also, he pointed out that substantial investments have come in regularly - a lot of it strategic (intelligent) capital investment rather than in the form of complete acquisitions. In a way, joint ventures have become the norm.
When asked what will fuel increase in acquisitions, Pitale said that the absence of capital will definitely push television owners to sell their businesses. Larger media companies which are cash rich must sense the gaps in their portfolios, which they may want to bridge.
In the cable space, one of the biggest acquisitions was the buyout of Reliance Communications by Digicable for Rs 4600 crore. For Digicable, this acquisition was not a move for survival. Kohli of Digicable said that all MSOs are surviving and none have folded up.
"It's about growth. The cable operations industry is unorganised and small scale. While everyone talked about bringing in VAS and on-demand services, nobody could ever do it because of lack of proper resources and infrastructure. The acquisition was required to grow and to fulfil our ambition of being a complete player," he explained.
Katial observed that FDI is another impediment. In India, a buyer can only put money in certain genres such as non-news and non-sport, except general entertainment, due to the FDI limits. Hence no control is possible for a foreign player, which is a big limitation. This makes the field completely open only to Indian players.
Sony, for instance, has recently acquired a Bengali channel called Channel 8. The broadcaster is keen on making more acquisitions in the regional space, although late. "The key issue in acquiring regional companies is valuation and we are not going to be dumb investors. Besides, some companies don't run for business but for different reasons," said Man Jit Singh of Sony.
Turner was in the news for acquiring Imagine from NDTV. Misra of Turner thinks that there is a lot of opportunity but what is worrisome is the 80:20 norm that exists in the industry today. About 20 per cent of the business commands 80 per cent revenue. This 20 per cent comprises the big players such as Sun, Zee, STAR and Network18. The panellists agreed that there had to be a level playing ground for broadcasters to tap into opportunities.
The event was organised by afaqs! in association with Big CBS (main sponsor) and STAR News (associate sponsor). The other sponsors include UTV Action, Bloomberg UTV, Sony PIX, Sahara Samay and Mastiii TV.