India?s R65,000-crore media and entertainment industry is poised for consolidation across print and broadcast segments, as bigger players look to expand their national footprint while smaller ones align themselves with the big ones.
Sector experts say that the landmark deal between Mukesh Ambani?s Reliance Industries and Raghav Bahl?s Network 18, which was announced on Tuesday, is the first of many such partnerships that will dot the media landscape this year.
?This is just the beginning and we?ll see more strategic deals and consolidation by the bigger players,? says Jehil Thakkar, executive director, media and entertainment at audit and consulting firm KPMG India. ?Mukesh Ambani himself will look to ink more content deals for his 4G telecom venture,? he adds.
The R30,000-crore broadcast industry is likely to witness the emergence of four to five strong pan-India networks in Star India, Zee Entertainment Enterprises, Network 18 Media, Sun TV Network and Multi Screen Media (MSM). These networks, together, are estimated to command 80% of the television advertising pie.
?There are close to 800 channels in India, but only three to four networks are making money as programming costs are extremely high,? says Farokh Balsara, media & entertainment leader for Europe, India, Middle East and Africa at Ernst & Young.
Star and Zee operate 65-70 channels between them, while Network 18 now has a portfolio of 30 channels across genres and geographies, following its acquisition of Eenadu?s TV business. Sun TV, on the other hand, dominates the southern market with 24 channels in four languages and MSM, which owns Sony, is looking to get into regional and sports broadcasting.
?In the next two years, small independent channels will join big networks,? says Balsara. ?This will not only bring down content costs, but help them improve their subscription revenues too.?
An independent analyst, on condition of anonymity, says that Sony may look to acquire NDTV?s channels to foray into the news genre. ?They can also launch their own sports and regional channels,? he adds. Sony officials have stated in earlier interactions with FE, that they are looking to get into the regional market but no names have been finalised yet.
While the television industry is dependent on advertising for 70% of its revenues, the share of subscription in the overall pie has increased in the last two years, as broadcasters have struck distribution alliances to curb piracy and under-declaration by local cable operators.
?With big networks getting bigger, the cable distribution scenario is changing as well,? says Ankit Kedia, research analyst at broking firm Centrum. ?Broadcasters are gaining muscle and negotiating better carriage deals with cable operators.?
Consolidation will also take place in the R19,300-cr print media space, as four strong players ? Bennett Coleman & Company, Dainik Bhaskar, Hindustan Media and Jagran Prakashan ? gain further ground. ?Print media market is fragmented, but four to five firms dominate different pockets,? says Namrata Sharma, media analyst at Pinc Research. According to industry estimates, these big firms hog 60-70% of the R10,000-cr print ad market.
Experts say regional publications score over their English counterparts in the print space. ?Uttar Pradesh, Maharashtra, Gujarat, Madhya Pradesh and Bihar are strong print markets,? says a media analyst at a Mumbai-based brokerage. UP?s print ad market is estimated to be R800 cr, while that in Maharashtra and Gujarat stand at R700 cr and R500 cr respectively.
?Dainik Jagran, Dainik Bhaskar and Hindustan will look to consolidate in key cities,? he adds. ?They may even acquire strong independent newspapers like Amar Ujala and Prabhat Khabar.?
Financial Express, a part of the Express Group, also brings out Loksatta and Jansatta which competes in this segment.
