Category: Specials

MUMBAI: Corporate activity was growing in the entertainment sector in India and this would help in getting finance more easily in the years to come.

Filmmaker Bobby Bedi and some other speakers in a session moderated by KPMG Executive Director (M & E) Jehil Thakkar on ’Legal and Financial Framework to Boost the Entertainment Industry’ at Ficci Frames were unanimous that getting finance today was much easier than before but felt that there was still very little institutional funding for films.

Dina Dattani who is a consultant said the new trend in Hollywood was that it was reaching out to India as people wanted change.

Patricia Mayer who is a leading lawyer in the field of entertainment and media in the United States, said it was interesting that American filmmakers were running out of ideas and taking licences of films from other countries particularly in Europe to remake them in English. What was needed was new stories. Answering a question, she said Indian films that appealed to the diaspora succeeded overseas.

Bedi said the business model has to change if Indian films have to get funds. The main problem was that Indian films tended to recover their money over a large period and most banks including the Industrial Development Bank of India refused to give money for such long periods.

He said in answer to a question that there was no impediment to foreign money coming into India for funding films.

YES Bank Executive Vice President and Country Head for Media and Entertainment Karan Ahluwalia said banks were already introducing new forms of funding, such as a fund of infrastructure. He felt that the Government should support the National Films Development Corporation to help private filmmakers who could not seek help from studios.

Legal Consultant Ashni Parekh said amendments were needed in the Copyright Act to protect the copyright holder. Unfortunately, there was little implementation of this Act.

She said new forms of financial arrangements such as Completion Bonding had come in but were not very practical in a situation where films took so long to make. She regretted that most filmmakers taking finance did not do any documentation primarily because of relationships.
 

MUMBAI: The Indian media and entertainment sector is ripe for mergers and acquisitions as bigger players look to consolidate in the backdrop of an overhang of debt and losses.

Around $1 billion is expected to pour into the sector over the next two years as the appetite for foreign investors grows with India being identified as one of the leading key growth markets.

Turner International, for instance, has pumped up its investments in India, already its largest revenue market in the Asia Pacific region, with the buy of Hindi general entertainment channel NDTV Imagine in late 2009 for a total consideration of $126.5 million.

Says Turner Broadcasting System International president Louise Sams, “India is where we made our largest investment overseas in 2009.”

Outside the broadcasting space, foreign investors are eyeing a piece in the cable TV business as the sector is in the process of digitising across the country. The direct-to-home (DTH) operators, weighed down by heavy losses as they subsidise to ramp up subscribers amid low ARPUs (average revenue per user), are also in search of investors to fund their expansion plans.

Says KPMG India head of media and entertainment Rajesh Jain, “The Indian M&E sector is expected to receive $600-$1 billion by way of mergers and acquisitions over the next two years.”

In 2009, the M&E industry saw 36 deals amounting to $471 million, 31 per cent lower over the earlier year, amid the backdrop of a challenging business environment. The industry witnessed 52 deals amounting to $879 million in 2008.

In 2009, the sector witnessed 10 private equity deals as compared to 18 in 2008 with deal values amounting to $210 million. The segment also witnessed 26 mergers and acquisition deals valued at $261 million as compared to 34 deals in 2008, according to a KPMG study.

TV broadcasting

Amid an advertising slowdown and tight market situation, broadcasters rationalised their existing portfolios by focusing on core competencies and exited from stressed segments.

In 2007-2008 Viacom entered into a joint venture with Network18 to launch Colors, 9X raised capital from a consortium of private equity investors, NBC acquired an equity interest in NDTV Networks and Time Warner backed Miditech to mark their foray into the Hindi general entertainment channel space, expanding the market from three players to six within a short period of time.

Cut to 2009. NBC exited NDTV Networks by selling their stake back to NDTV, reportedly at a discount to entry price. NDTV in turn exited the GEC space by selling to Turner International.

In the near term, the Hindi GEC segment is expected to remain competitive with the leadership position at stake. With over seven players competing for market share, channels are expected to invest substantially in placement fees and content to gain viewership share.

The Zee Group increased its equity interest in Ten Sports from 50 per cent to 95 per cent. “As a result, consolidation between existing broadcasters is expected to continue and only broadcasters with sound financial strength, strong channel bouquets and innovative content are expected to survive,” the KPMG study says.

Distribution Biz

DEN Networks, the cable television distributor, tapped the capital market to raise Rs 3.7 billion. Hathway Cable and Datacom followed with a public issue soon after to raise over Rs 6.6 billion from the capital market.

In a significant development in the DTH industry, Apollo Management, a US – based private equity fund, acquired 11 per cent equity stake in Dish TV for $100 million.

Going forward, KPMG predicts that the sector is likely to witness disruptive change. “Deal activity in 2010 is likely to be driven by acquisition of LCOs by MSOs in order to gain last mile connectivity, consolidation amongst the MSOs and capital raises by MSOs and DTH operators to fund infrastructure augmentation /roll out and customer acquisitions,” KPMG says.

Print

The print industry witnessed a low level of deal activity in 2009. The only major deal was the IPO of DB Corp. The IPO paved way for the partial exit of Cliffrose Investment, the Mauritius-registered affiliate of Warburg Pincus which in May 2006 had originally invested in Writers and Publishers Ltd (WPL), which gave Cliffrose a 7.14 per cent stake.

The magazine sub-segment too witnessed some deal activity with Raghav Bahl promoted Network18 Group entering into a joint venture with Forbes, to launch business magazines in India. In another deal, Heinrich Bauer Verlag KG, a German publishing company, exited their investment in Next Gen Publishing, a niche publications company in India. Heinrich Bauer Verlag KG had inherited this investment from Emap plc which had invested in Next Gen in 2007.

KPMG notes that in the near term, regional print companies are expected to raise capital either through public capital markets or private equity to expand their presence across news distribution media and also launch niche city centric supplements in an effort to ward off the threat from larger print companies.

In addition, with over 398 daily newspapers published in India, consolidation is imminent in the print industry with larger players seeking margin growth and geographic expansion by acquiring smaller regional players. International newspaper majors remain positively inclined towards the Indian print market but deal activity from such players is likely to be limited until the FDI caps are rationalised.

Filmed Entertainment

The film exhibition segment witnessed the first signs of consolidation with Inox Leisure buying out 43.3 per cent equity interest in Fame India from its promoters for approximately $14 million. However, this deal has its own complexities, with ADAG – owned Reliance MediaWorks making a counter offer for Fame.

In another story of consolidation, PVR Cinemas also expressed their interest in acquiring DT Cinemas, the theatre chain owned by the DLF Group, which was later called off on account of a valuation mismatch.

The exhibition business also witnessed private equity interest, with IFCI acquiring a minority equity interest in Satyam Cineplex, a movie theatre chain based in North India.

With economies of scale being a prime value driver in the film exhibition space, this segment is expected to witness further consolidation.

Radio

In the radio segment, Astro increased its equity interest in South Asia FM from 6.98 per cent to 20 per cent. Regulatory changes such as relaxation of FDI limits, granting permission to own multiple frequencies in a city and the permission to air news and current affairs hold the key to the growth of this segment.

In the near future, relaxation of regulatory norms is likely to facilitate consolidation amongst domestic players as well as drive active interest from large international private equity players and global radio majors.

Emerging segments

The emerging segments such as animation, gaming and OOH witnessed limited deal activity in 2009. In the animation segment, Aptech Ltd acquired Maya Entertainment, for $16.4 million.

MUMBAI: Good screenplay and content are what make films click at the box-office and other factors are secondary, according to renowned filmmakers and script writers.

Addressing a session on ‘The Screenplay: The Missing Link’ at the ongoing Ficci Frames 2010, speakers were emphatic that greater attention should be paid to the content and to the script.

In fact, actor Shah Rukh Khan had said at the inaugural session that screenwriting should be treated as a science and not an art, and screenplay writers needed to sharpen their screen writing skills.

It was pointed out that in Hollywood, scriptwriting is a long process which sometimes takes as long as three years and is accompanied by research. As a result, the actual shooting does not take too much time since the screenplay is written with all details and this makes it easier for the director to shoot without hindrance.

But in India, scriptwriting is given very little importance. According to screen writer Kamlesh Pandey, of the several producers he had taken the script of Rang De Basanti, one had asked him after sitting on the script for a month: “Tell me, who is this Basanti?”, to which he had retorted: “Well this film is ‘Sholay’ from the perspective of Basanti.”

“This is the condition of screenwriters here. Let me tell you something. The Film Writers Association is fighting with the producers to pay a minimum of Rs 200,000 to a screenplay writer,” said noted lyricist, poet and screenwriter Javed Akhtar.

“Rather than concentrate on the script, producers are more interested about the stars, the locations and the technical expertise without appreciating that the screenplay is the foundation of a film. Mostly, films crumble at the box-office because their screenplays are weak,” Akhtar added.

Hollywood scriptwriter Steven de Souza agreed: “There in Hollywood we do not lay emphasis on stars but on stories – Avatar being the latest example”.

Responding to an oft-repeated question, Akhtar said “Stories are mostly written keeping in mind the 1200 multiplex screens the country has, despite the fact that these will cater to just 35 per cent of the population of the country, and the other 65 per cent reside in small towns or villages.

“Earlier, writers could not find any subject other than stories for gangster films. Now even that is saturated. Actual stories are happening in interiors but why is it that we do not source our stories from the hinterland?”, asked Akhtar.

De Souza said no one got down to making a film until the screenwriting is complete, whereas in India it is just the opposite.

“While an art director and a film editor sit ahead of the camera when the shoot happens, the scriptwriter is made to stand way behind the camera,”
creenwriter Pandey complained.

Akhtar said, “Screenplay writers should get their right due and respect

as good stories paved the path of success at the box-office”.
 

MUMBAI: Senior editor M J Akbar today said the entire agitation against paid news was misplaced since the media was the greatest beneficiary of doles given out by the government.

Speaking at Ficci Frames 2010 here, he said “the biggest purchaser of news and credibility is the government.

Noting that the so-called control of content by advertisers was the least of concerns before the media, he said mediapersons were recipients of advantages like housing and government advertising in newspaper.

Furthermore, the biggest power in the media was the Board Room in the sense that content was often decided according to the business interests of the media group.

Speaking on ‘Content is king, but who dictates it – advertising, consumer taste or editorial policy’, he said the real problems for newspapers were created by the creators. This was because the biggest asset that present-day journalists and particularly managements in newspapers had was ego-mania and not news. There was very little truth in the maxim that the consumer was king and the news was in keeping with what he wanted to see or read.

He said the editors of newspapers in the fifties or sixties were more like editorial writers and did not interfere in the news – ‘in fact, they hardly ever came into the newsroom. But this changed in the seventies and particularly when the television news came in a large way.

But he said the editor as dictator could not survive for long, but nor could the consumer become dictator. And, therefore, the Board Room took over.

Referring to the advent of new technologies, he said the Internet could not be blamed for the downfall of television or newspaper. Every medium has its advantages or disadvantages. For example, he said a consumer could not carry a TV or personal computer around all the time the way a newspaper could be carried, and so the print media would remain supreme.

The Internet began dominating in the west because the newspapers were denied the democratic right to choose their news, unlike India where the newspaper has always had greater credibility with the reader.

MUMBAI: Independent film producers in the US face a tough road ahead. Fewer banks are lending, financial terms are spun into complex cobwebs, some studios like Paramount Vantage are shutting shop, independent films are made to hunt hard for buyers and the DVD business is in a state of slumber.

“I am confident that there enough people with passion who will make films on important issues. Having said that there is the danger that four years down the line there might be less variety in terms of Hollywood content,” said Hollywood producer Lawrence Bender during his keynote at the Ficci Frames convention here today.

Bender, whose new documentary about the dangers of nuclear proliferation is being released in the US in July, said he made An Inconvenient Turth with Al Gore believing that it would make a difference to the world.
 

MUMBAI: As the global market steadily walks out of the slowdown crisis, the worldwide advertising industry will have to spread across new geographical areas, segment markets and localise to achieve long-term growth.

While addressing the audience at the Ficci Frames 2010 here, WPP Group chief executive Sir Martin Sorrell said, “In a bid to achieve long-term growth, media players have to understand the market capacity of each region and then locate, incentivise and maintain cosumers and people with localised strategies.”
 
The push will also come significantly from web as today, youth are “magnificantly”attracted to this medium – not just in terms of time spent by them on this platform but also because of their desire to work for web-based companies.

“Mobile will also act as a major slimulant gobally to propell this growth. Indian too, with its 425 million users growing at a rate of 25 million a month, will witness a positive growth in its advertising spends,” he adds.

Sorrell further notes that internal communication driven by new-age technology, global union of retailers with manufacturers and the transfer from global co-ordination to glocal (global and local) co-ordination with bring about a massive upswing across the wordwide advertising industry.
 
Meanwhile, for 2010, WPP will focus on the BRIC nations which Martin expects to constitute one-third of the company’s overall business pie in the next 4-5 years.

“Last year, India comprised 27 per cent of WPP’s overall revenue and now, we are expecting a double digit growth from the sub-continent,” he said. 
 
In 2008, WPP posted a revenue of $400 million from India. WPP saw profits fall by 11 per cent to $1 billion in 2009 as the economic downturn bit hard into its business, but India again showed a positive growth.

In january and February, while our business has returned to stability globally, our revenues are 7-8 per cent up in India,” he says.

MUMBAI: Ubiquitous access, simpler production tools, and the falling costs of technology have made sure that the boom of the Internet is here to stay, unlike in 2000 when net 1.0 burst.

Google President (Global sales operations and business development) Nikesh Arora feels that users having laptops or personal computers expect net access through Wi Fi. “This feature has gone from ‘nice to have’ to ‘must have’. Secondly the tools of production have become simple. Earlier you needed a camera to take photos. Today you have camera mobile phones that allow you to work on the fly. Thirdly, the cost of technology is steadily falling.”

Speaking at the Ficci Frames 2010, he said 30 to 50 per cent of content will be digitally distributed five years down the line. The time people spend on the web will grow and result in ad spends shifting towards the online medium. At the same time, the net has changed the mode of distribution.
 
There are differences in terms of how the net facilitates content delivery. “In India, the net will be pushed by the mobile. The advantage for us at Google is that it allows us to take Indian content like the IPL to a global audience,” he added.
The Internet is also affecting consumer behaviour and consumers want information immediately. Figures show 150 billion emails are sent everyday.  
 
But there are challenges like maintaining users’ privacy and respecting copyright, he said.

MUMBAI: The Indian television industry is poised for a giant leap forward. With growth engines coming from both advertising and subscription revenues, the segment is estimated to touch Rs 521 billion by 2014, up from Rs 257 billion in 2009.

A CAGR of 15.2 per cent over the next five years will be fuelled by wider digital penetration, fiercer competition in the TV distribution business, and deeper advertising support.

Ad revenue will grow at a rate of 15.6 per cent, according to a Ficci-KPMG report released today at Frames 2010, slightly higher than subscription income that is set to run at a CAGR of 15 per cent.

The turning point is the improvement in the global economy. The slowdown had hurt the television industry in 2008-09 as it grew at 7 per cent during this period, compared to a 14 per cent grow in the year-ago period.

Digitisation will be the sweet spot as it increases transparency and unlocks undisclosed revenues for broadcasters from the cable TV operators. The share of broadcasters in the subscription pie is expected to go up from 18 per cent in 2009 to 27 per cent in 2014.

The share of subscription revenues in the top line of broadcasters is expected to increase from 26 per cent to 33 per cent by 2014. Subscription revenues for them are growing at a CAGR of 24 per cent compared with the segment’s ad revenue growth of 15.6 per cent.

2009 saw show budgets being cut by 15-20 per cent and certain cost effective formats becoming popular with producers. The disadvantage of reality TV is that it is more expensive than fiction and does not generate high TRPs compared to fiction.

On the advertising front, KMPMG notes that in 2009 regional general entertainment channels became popular with advertisers. Their ad spend grew to 29 per cent compared with 21 per cent in 2006. Their share came at the expense of Doordarshan which was earlier preferred by advertisers looking for a regional reach. Ad volumes on regional channels increased by 12 per cent due to new channel launches and increase in FCT.

The year gone by has not been good for English and Hindi news channels as both lost share. This was compensated to an extent by growth in the regional news channels. This reached a 3.4 per cent of all India viewership in 2009, up from 2.6 per cent in 2008. The share of Southern news channels reached 5.8 per cent.

2009 was also tough for music channels with viewership shares dipping across all TGs. They are finding it more and more difficult to attract and retain interest due to more competition from GECs and other genres. The maximum loss of share has been in the 25+ TG. A new development that took place was an attempt at re-positioning music channels, drawn from the fact that MTV and Channel V started focusing on non music content.

The kids genre grew their all India viewership across TGs. A positive trend for 2009 was that apart from children, the channels managed to attract the 15+ TG and adults as well. Kids channels tried to create a 360 degree communication platform by interacting with kids through sites, phones etc.

Challenges: The lack of transparency in analogue cable systems has traditionally been a challenge for broadcasters. LCOs still garner almost 75 per cent of subscription revenue due to under declaration while broadcasters get 20 per cent and MSOs five per cent. This scenario could change with the higher penetration of digital platforms.

Carriage fees eased during 2009, amounting to a payout of Rs 10-12 billion by broadcasters.

Another challenge lies in having an extended audience measurement system for the broadcasting industry. Though the current measurement system captures information from 8000 TV homes, the coverage is limited and the trends may not be descriptive of the entire nation.

The focus of advertisers is likely to rest on 360 degree connect with consumers. This may give rise to a need for multimedia campaigns. Broadcasters, thus, can expand their portfolio of services or tie ups with other players to offer ad packages.

“A continued focus on operational effectiveness and cost efficiency is likely to help improve overall profitability,” the KPMG report says.

MUMBAI: Does sports stop being entertainment when one starts rooting for a team and gets emotionally attached to the game?

Interestingly, this was one of the comments that came forth during a discussion at the Ficci Frames which sought to examine the correlation between sports and entertainment. Former cricket Ajay Jadeja sought to link the two by saying that the involvement of Bollywood was the key to the success of the Indian Premier League (IPL).

Other speakers were Triplecom Media chairman and CEO Kunal Dasgupta, actor Rahul Bose and former Indian hockey captain Viren Rasquinha.

It was noted that the IPL Governing Council glamourised the event to expand its reach, and people who otherwise would not have come for cricket came to see Shah Rukh Khan and other celebrities. Dasgupta admitted that when Max started on the IPL journey, the focus was more on entertainment rather than on emotion.

Bose said the game was beginning to be taken more seriously then as mere entertainment. Dasgupta noted that women and kids have now started watching the IPL. He admitted that bringing in Mandira Bedi in 2003 had been aimed at bringing in the glamorous quotient.

Even the IPL succeeded only because of the entry of giants as franchises of teams, he said. “The BCCI initially did not want to go the franchise route for the IPL. We told them to do this and allow for celebrity ownership and not just faceless corporates. This helped put a face on teams that people relate with’.

At the session it was also noted that actors are more effective marketing tools than cricketers even in the sporting world. It was observed that this was why more Shah Rukh Khan T-shirts are sold than those of Saurav Ganguly or any other cricketer. Indians have grown up more with Bollywood as opposed to sports, and cinema has been a cultural centre. In any case, it was said that cricketers or other sportspersons are not as savvy as actors when it came to marketing themselves.
 

MUMBAI: The opening of the annual Ficci Frames 2010 was glamorous with the presence of Bollywood personalities like Yash Chopra, Karan Johar, Shah Rukh Khan and Katrina Kaif, but the television industry was treated as a poor cousin on the first day.

With the 11th Ficci Frames concentrating like the previous years on the business of entertainment, even the bigwigs of Bollywood along with those from the United States concentrated on business.

Perhaps the only difference was that the presence of these personalities perforce made everyone speak only about cinema, despite the fact that the three-day meet is about all aspects of entertainment.

And Katrina along with Dutch actress Victoria appeared to be present to add the glamour quotient, and participated in the Lamp Lighting ceremony.

But unlike other events which do not have a political bent, Maharashtra Chief Minister Ashok Chavan stayed on for the entire duration of the session, which started almost an hour late and lasted around two hours.

And expectedly, Shah Rukh Khan who is still smarting from the ‘My name is Khan’ controversy and Yash Chopra apart from the Chief Minister used the podium to make political points, mostly surrounding around the attempts to prevent the screening of the Karan Johar-directed SRK starrer. 

Interestingly, Fox Filmed Entertainment CEO James N Gianopulos not only quoted SRK who had recently said that in India, seeing films was like brushing teeth in the morning and ‘you cannot escape it’, but also Mark Twain about the way Indian civilisation had affected the world.

As the day rolled on, the debate on entertainment moved to other areas. A big miss, however, was the absence of the Information and Broadcasting Minister Ambika Soni who was caught up in Parliament following the issuance of a whip in Rajya Sabha where the discussion on the Budget was coming up for voting. She will now be available on the final day of the event.