Saregama: sound of music

Font Size

Print

Feedback

Email

Discuss

Related Articles

FIIs sell shares worth Rs 910 cr

In a rapidly expanding entertainment and media business, the only laggard could be the music industry. Plagued with the problems of rampant, uncontrollable piracy revenue growth in this segment of the industry is easily the lowest.

But the RPG group Saregama seems to have found a way around. It has stopped bidding aggressively for music rights, which entail a huge upfront capital outflow and thereby financial risk. It seems contended with garnering around 10-15% of all new music rights. Its music bank of 300,000-plus tracks (across 13 languages) has high ‘repeat’ value, reckon analysts.

But then it just about provides steady cash-flow for funding acquisition of new rights. It also has started focussing on retail stores and corporate clients for its sales.

The company can boast of the largest distribution network in home-video entertainment and partners with five of the biggest Hollywood studios. It has a strong distribution advantage with 200 distributors spread across India and has presence internationally on all the continents. Still, physical sales of music products have been declining.

But then it is not this aspect that is exciting analysts. The company has been focussing on the music publishing business, that is selling music in non-physical format. In FY07, its publishing income jumped 132%, thanks to FM radio stations and the mobile-subscriber growth.

With the expected growth in in India’s FM stations from 60 to 260, mobile subscribers from 200 million to 383 million by FY10, and growing digital downloads, will drive the 39% compounded growth in publishing income over FY07-10, says a CLSA Asia Pacific Markets report. It also has tie-ups with leading internet portals to distribute its catalogues, and films-distribution tie-ups in the home-video segment, and not to mention TV content production.

Saregama’s television-content and movie production is also catching up with the growing industry hunger for quality content. It has three releases in FY08.

Here again, the company is testing the waters by focussing on the focuses on mid-to-low-end of the market, and not committing blockbuster monies.

The CLSA report adds that for derisking, Saregama pre-sells movie rights either in parts or in full.

Also, the company pursues various languages and genres. Looks like the company has changed with the changing times