http://www.indiainfoline.com/news/innernews.asp?storyId=75978&lmn=1
Indian media and entertainement sector to grow to US$200bn India Infoline News Service / Mumbai Aug 12, 2008 12:49 The Indian media and entertainment sector is likely to grow to US$200bn industry by 2015 from US$12bn currently. Attracted by such growth, global media and entertainment companies such as The Walt Disney Company, The Warner Group, Viacom, Inc., Sony Pictures Entertainment, Inc., The Financial Times and the Dow Jones & Co. have entered the market by either acquiring a stake or partnering with an Indian counterparts. Last month, News Corporation, the world's largest media conglomerate by market capitalization, announced it would invest more than US$100mn to launch six new television channels in India over the next year. The potential for growth in India's print media is underscored by its low penetration rate of 38%. The market grew by 15% in 2007 to US$3.7bn from US$3.2bn the previous year. The sector is expected to grow at compound annual growth rate (CAGR) for 2008 through 2012 at 13% for newspapers and 15% for magazines. The comparative estimated CAGR internationally (for 2007 through 2011) is 2.1% for newspapers and 3.1% for magazines. The slower pace of growth in the mature markets is expected to attract other global media companies to the fast growing Indian market by acquiring stakes of as much as 26%, the maximum foreign ownership permitted in an Indian entity. Mecom Group Plc, one of the leading media groups of Europe that has 300 titles publishing 30 million copies a week with presence in five countries of Europe - Netherlands, Denmark, Norway, Germany and Poland is wilting under the prevailing downward pressure on advertising volumes and price – could see a brighter side by making an India entry. The group revenue growth for Mecom in the year 2007 was more or less flat registering a growth of only 3% to £1,352mn (US$2,685.5mn) from £1,319mn (US$2,621mn) the previous year. The situation was compounded with the surge in the Euro that has inflated the level of Mecom's net debt to around £600mn (US$1,191mn) from £524mn (US$1,041mn) at the end of calendar year 2007. The current recessionary trends in the economies in Europe, the commodity price inflation and the consequent softening of the consumer demand seem to be taking its toll on the media sector. The reduced consumer spending has forced some of the key industries that until recently were keen advertisers including automotive, personal care, entertainment and media, real estate, pharmaceuticals, food and soft drinks, among others to cut down on their advertising budgets. For instance, The Experian National Retail FootFall Index for the U.K. fell by 2.6% year-on-year in June 2008, the fifth monthly drop this year. Out-of-town retail destinations experienced much larger drops in visitors, down 5.8% compared to a 1.5% fall in town centres. Retail sales in Europe slumped to 48.2 in March 2008 from 52.4 a month earlier, on gauge scale, used for measuring retail sales, on account of eroding consumer confidence in all the European countries, as per the Bloomberg purchasing managers index. These pressure points are expected to have a telling effect on the balance sheets of Mecom. For example, Mecom in Denmark, has the largest real estate section with the national title Berlingske Tidende. In 2006, it generated revenue of about £15.8mn (US$31.5mn). Since last year, however, Mecom has lost about 30% volume. In a bit do retain customers, it has dropped prices 25% across the board. That percentage drop in volume and price translates to a revenue loss of £2.1mn (US$4.2mn). Annualized for 2008, it could result in losses of up to £5.8mn (US$11.5mn). With the prevailing downward pressure on advertising volumes and price across other categories as well, it will be a challenge for Mecom to register growth in the year 2008. Mecom's revenues from operations in Denmark had shown a marginal fall in revenue in 2007 at £353mn (US$701mn) from £356mn (US$707mn) the previous year. To cushion the effect of the slow down in Mecom's operations in the respective countries and to reduce its debt, the management could consider selling its Norwegian division, Edda Media, one of Mecom's fastest-growing businesses for which it has received a bid of about £375mn (US$744mn) from an unnamed bidder. In contrast, in 2007, it grew 2% in the Netherlands, 5% in Poland and 7% in Norway and Germany. The eroding value and reduced profitability of the company is reflected in its shares that are trading at less then 80% level compared with a year ago. The management, therefore, has to make decisions such as selling its business units such as Edda Media or enter emerging markets like India, which offer significant growth opportunities. ------------------------------------ -- INFORMATION OVERLOAD? Get all ZESTMedia mails sent out in a span of 24 hours in a single mail. Subscribe to the daily digest version by sending a blank mail to [EMAIL PROTECTED], OR, if you have a Yahoo! Id, change your settings at http://groups.yahoo.com/group/ZESTMedia/join/ PARTICIPATE Share media news, discuss journalism issues and network with media professionals across South Asia on this mailing list. Just write to [email protected] TELL FRIENDS TO SIGN UP If you got this mail as a forward, subscribe to ZESTMedia by sending a blank mail to [EMAIL PROTECTED] OR, if you have a Yahoo! ID, by visiting http://groups.yahoo.com/group/ZESTMedia/join/ Also have a look at our sister list, ZESTCaste: http://groups.yahoo.com/group/ZESTCaste/Yahoo! 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