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Industry Analysis- Media

Industry Analysis- Media

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  • 1. Page 1 of 40 INDUSTRY ANALYSIS INDUSTRY – MEDIA GROUP MEMBERS SANI SAHA SARBAJIT PRAMANIK PREETAM LAHA NAYAN SAHA BHARAT PATEL SAIKAT KUNDU SAYAN ADHIKARI
  • 2. Page 2 of 40 UWSB, TERM V, NEVEMBER-2013, MARKETING MAJOR
  • 3. Page 3 of 40 SL NO CONTENT P.NO 1 OVERVIEW 1.1 BRIEF HISTORY 4-8 1.2 GROWTH DRIVER 9-11 1.3 GOVERNMENT REGULATIONS 12-14 1.4 LEADING COMPANIES 15 1.5 ESTIMETED SIZE OF THE INDUSTRY 16 1.6 TRENDS IN SALES OVER RECENT YEARS 17-19 1.7 CURRENT OPERATIONAL/ MANAGEMENT TRENDS 19-20 1.8 MARKET STRATEGIES PREVAILENTS 21-23 1.9 SENSITIVITY TO ECONOMIC FLUCTUATIONS 24-25 2 INDUSTRY DEVELOPMENT, NEWS, INNOVATIONS 26-30 3 CONSUMER MARKET DATA 31-35 4 COMPETITOR INFORMATION 36-39
  • 4. Page 4 of 40 NO LIST OF TABLE P.NO NO LIST OF FIGURE P.NO 1 GROWTH: LITERACY AND MEDIA CONSUMPTION 10 1 PRINT ADVERTISING ADVERTISEMENT VOLUME 10 2 RADIO LISTENERSHIP AGE GROUP WISE 11 2 TV VALUE CHAIN 19 3 PHASE OF DIGITIZATION IN INDIA 12 3 FLOW IN ANALOGUE AND DIGITIZATION SYSTEM 20 4 TAXATION ON CABLE AND DTH SECTORS 12 4 THE DIGITIAL CONSUMER AND DISRUPTIVE TECHNOLOGIES 20 5 TRAI REGULATIONS 13 5 VIEWER SHIP ACROSS TV GENERES IN INDIA 22 6 FDI IN BROADCASTING SECTOR 14 6 ADVERTISING AND CIRCULATION REVENUE SHARE 25 7 LEADING MEDIA GROUP IN INDIA 15 7 BREAKUP OF DOMESTIC AND IMPORTED NEWS PRINT CONSUMPTION 26 8 OVERALL INDUSTRY SIZE AND PROJECTIONS 16 8 EVOLUTION OF PLATFORM CONVERGENCE 30 9 ADVERTISING REVENUE 19 9 EXTRACTED OF DELOETTE MEDIA DEMOCRACY SURVEY 2010 31 10 TOP CATEGORIES ADVERTISING ON PRINT 25 10 VIEWER SHIP SHARE OF REGIONAL CHANNEL 33 11 KEY TRANSACTION IN 2012 27 12 HIGH DEPENDENCE OF COMPANIES ON RURAL MARKET 32 13 MOBILE & OUT OF HOME LISTERNERSHIP 35 14 A COMPARISION 36-39
  • 5. Page 5 of 40 1. OVERVIEW 1.1 BRIEF HISTORY- Indian Media consist of several different types of communications: television, radio, cinema, newspapers, magazines, and Internet-based Web sites/portals. Indian media was active since the late 18th century with print media started in 1780, radio broadcasting initiated in 1927, and the screening of Auguste and Louis Lumière moving pictures in Bombay initiated during the July of 1895. It is among the oldest and largest media of the world. SOME NUMBERS (SOURCE- KPMG, 2013) 730 million TV Viewers 181 million Press AIR 159 million Radio listeners 176 million Internet users Indian Press under British Rule Bengal Gazette (English weekly) published by James Augustus Hickey in 1780 Jan 29th from Calcutta. It was the first newspaper in South Asian sub- continent - Bengal Gazette alias „Hicky Gazette‟, „Calcutta General Advertiser‟ - Declaration „a weekly political and commercial paper open to all but, influenced by none‟ - Hickey had his own column, many persons wrote by pen names. - Bengal Gazette could not survive more than two years due to sharp confrontation with Governor General Warren Hastings and Chief Justice Elijah Impey. Indian Gazette as a rival to Bengal Gazette, published in the same year (1780) by Peter Read, a salt agent (backing by Hastings). After Bengal Gazette, other publications from India were- Madras Courier weekly (1785), Bombay Herald weekly (1789) merged into Bombay Gazette in 1791, Hurukaru weekly (1793), Calcutta Chronicle (1818), Bengal Journal, Indian world, Bengal Harkarer etc. In the early period newspapers in India were run by Britishers. Indian’s involvement in publication - Raja Ram Mohan Roy, the pioneer Indian journalist and social reformer - By his inspiration Gangadhar Bhattacharjee published Bengal Gazette (1816), the first Indian owned English daily newspaper, but could not survive long - Raja‟s own publications- Sambad Kaumudi (Bengali 1821), Mirat ul Akhbar (Persian 1822)
  • 6. Page 6 of 40 and Brahminical Magazine (English 1822) - Press Regulation –1823 imposed by British govt. in India to control newspapers. - The regulation was used as a tool to deport James Silk Buckingham, Editor of Calcutta Chronicle. - Raja presented a petition to Supreme Court to protest the regulation in favour of J.S. Buckingham. - It was his bold step for the preservation of press freedom, however he defeated the case. - Anti reformists Hindu fundamentalists published Samachar Chandrika weekly to challenge Raja‟s social reforms. - Raja passed away in 1833 1857 Mutiny (the first war of Indian independence) was a turning point to Indian journalism. - In the issue of mutiny, British owned press and Indian owned press blamed each other in the lowest level. - British owned press acted like blood mongers of Indians. - This event worked as a fuel to Indian owned press against the British rule in India. - Pioneers Indian journalists on those days- Raja Ram Mohan Roy, Gangadhar Bhattacharjee, Bhawani Charan Bannerjee, Dwarkanath Tagore, Girish Chandra Ghose, Harischandra Mukharjee, Ishworchandra Vidyasagar, Kristo Pal, Manmohan Ghose, Keshub Chander Sen etc. - Other major publications by Indians- The Reformer, Enquirer, Gyan Auneshun, Bengal Herald, Bang Doot, Hindu Patriot, Indian Mirror, Sulab Samachar, etc. After Mutiny Standard, The Bombay Times and Telegraph merged into Times of India in 1861, Robert Knight was the owner , he was also owner of Statesman daily (1875) from Calcutta, Indian Economist monthly and Agriculture Gazette of India, his editorials and writings were balanced and impressive. Other major publications- Indu Prakash weekly, Gyan Prakash, Lokhitavadi (all 1861), Amrit Bazar Patrika (1868 Cacutta), Pioneer (1872 Allahbad), The Hindu (1878 Chennai) , Kesari (marathi) and The Maratha (English) (both in1878 from Pune by veteran freedom fighter Balgangadhar Tilak) Pioneer Indian Journalists- Bal Gangadhar Tilak, Mahadev Govinda Ranade, Dadabhoi Naoroji, Gopal Rao Hari Deshmukh, Vishu Shastri Pandit, Karsondas Mulji, Bal Sashtri Jambhekar etc. British govt. enacted Vernacular Press Act-1878 to suppress Indian language newspapers
  • 7. Page 7 of 40 Indian National Congress (INC) founded in 1885. It was led by many nationalists like Surendranath Banerjee, Balgangadhar Tilak, Dadabhoi Naoroji, Motilal Gosh, Bipin Chandra Pal, G. Subramania Aiyer, etc., who were active journalists too. After establishment of INC, Indian press became an important part of struggle for independence. Leading Newspapers After Establishment of INC -1900- Bangalee English Daily (ed)- Surendranath Banarjee -1901- New India English Weekly (ew)- Bipinchandra Pal - 1901- Bande Mataram – Bengalee weekly- Bipinchandra Pal - 1906- Yugantar – Bengali daily- Barendra kumar Ghose - 1909- Leader- ed- Madan Mohan Malviya - 1913- New India –ed- Annie Besant - 1913- Bombay Chronicle –ed- Phiroj Shah Mehata - 1918 –Justice- ed- Dr.T.M.Nair (published by non- Brahmin movement in Madras) - 1918 – Searchlight- English biweekly- Shachindranath Sinha -1919- The Independent -ed– Pandit Motilal Neharu - 1919- Young India – ed- Mahatma Gandhi - 1920 – Nav Jeevan – Gujarati weeky- Mahatma Gandhi - 1922- Swarajya- ed- T.Prakasham - 1923- Forward- ed- Chittaranjan Das - 1923- The Hindustan Times –ed- K.M. Panikar (first daily in Delhi) - 1929- Liberty-ed- Subhas Chandra Bose -1932- Harijan- Gujarati weekly- Mahatma Gandhi - 1938- National Herald- Jawaharlal Nehru The Golden Era of Indian Mission Journalism (1920 – 1947) - Declaration of non-cooperation movement against British rule in India. - Press marched shoulder to shoulder with Satyagrahis. - Mahatma Gandhi lauded for freedom of expression, ideas and people‟s sentiments - Gandhi would not accept adv., he believed newspapers should survive on the revenue from subscribers - He would not accept any restrictions on the paper, he rather close it down - His writings were widely circulated and reproduced in the newspapers all over the country - A big challenge to non-Gandhian newspapers. - Gandhi declared „Salt Satyagraha‟ in 1930 - The nationalist press played a memorable role, which perhaps is unique in the history of any freedom movement. - Press ordinance issued in 1930 to suppress Indian press through heavy security deposits. - When second world war broke out , British rulers became more suppressive to the Indian press - In 1940 UP government directed the press to submit the headlines of the news to the secretary of the information department for his pre- approval
  • 8. Page 8 of 40 - In response to this, National Herald (newspaper run by Jawaharlal Neharu) published the news without headlines - Second world war and freedom fight gave more fuel to Indian press - Britishers charged them as „ pro-Hitler‟ - All India Newspaper Editors Conference held in 1940 at Delhi voiced against the suppressive attitude of the British govt. - Fresh suppression and struggle started from 1942 when Quit India Movement initiated - Many press, publications and journalists including Neharu suspended and arrested in1942 - It continued until the declaration of independence in1947 August - K. Rama Rao, Editor, Swarajya “ It was more than a vocation, it was a mission and the newspaper was a noble enterprise working for patriotic purpose”. Indian Press: 1947 Onwards - India received independence from British rule on 1947 August 15th - The press celebrated the independence, because it was their victory too. - At the beginning of independence the relation between the national govt. and press was good, but a year after situation was changed - P M Nehru, Sardar Ballav Bhai Patel, etc. were not happy with the press. - Press Commission- 1952, report- 1954 - Recommendations – Press Council, press registrar, minimum basic salary for working journalists, strengthen the role of the editors - The working journalist act-1955 - The newspaper (price and page) act- 1956 - Press Council established – 1965 P.M. Mrs. Indira Gandhi declared state of emergency on 1975 June - It was a shocking blow to the freedom of press - Ignored the press freedom guaranteed by article 19 (1) in the constitution - Heavy censorship during the emergency period under Defence Rule “ in order to maintain public order…” - 1975 Dec 8th ordinance banned the publication of all „ objectionable matter‟, no permission to report parliament, close down Press Council , blaming it was failed to curb provocative writings - During 19 months of emergency 253 journalists detained and 7 foreign correspondence expelled When Janata Dal came into power, all the restrictions over press were removed - After emergency Indian press became more professional along with high tech., simultaneous publications increased, tremendous change in the contents, more supplements, booming of specialized magazines - Press Council re- established under new act- 28 member, chaired by retired judge of high court
  • 9. Page 9 of 40 CENTENARIAN NEWSPAPERS OF INDIA The Times of India – 1861 Amrit Bazar Patrika – 1868 Pioneer - 1872 The Statesman - 1875 The Hindu – 1878 RADIO - Amateur Radio Club started local broadcasting in 1924 at Madras - Indian Broadcasting co.(private) 1927- Bombay and Calcutta - Indian State Broadcasting Service – 1930 - Name changed as All India Radio (AIR) / Aakashbani - Before independence AIR stations in Hyderabad, Baroda, Mysore, Trivandrum, Aurangabad, Delhi, Bombay, Calcutta, Madras, Lukhnow, Pesawar and Dhaka - During second World War radio became more popular in India - After independence AIR was a major tool to disseminate govt. information - AIR as an „ electronic ambassador‟ in abroad - Now AIR have more than 200 stations - News in 24 languages including Hindi, English and many other languages of India - From 1997 broadcasting is being regulated by an autonomous corporation under Prasar Bharati Act TELEVISION - Door Darshan (DD) started as an experiment in 1959 from New Delhi, for educational purpose - Regular broadcasting started from 1965 from New Delhi - Indian Space Research Organization borrowed a satellite from NASA (National Aeronautics and Space Administration) in 1975 - Color broadcasting from 1982 on the eve of Asian Games held in New Delhi - 40 different broadcasting centers - programs in about a dozen languages - after 1995 many private channels - all TV broadcasting regulated by Prasar Bharati Act NEWS AGENCIES - Press Trust of India (PTI) 1947 - Hindustan Samachar 1948 - United News of India (UNI) - 1961 - Samachar Bharati –1965 Hindustan Samachar and Samachar Bharati produce news in various Indian languages while PTI and UNI in English
  • 10. Page 10 of 40 1.2 FACTORS THAT AFFECT GROWTH- DIGITIZATION- Impending digitization has encouraged a few broadcasters to take a leap of faith in launching specialty, advertisement free and niche channels, particularly in the Kids genre. Many of these channels are available only on digital platforms in order to develop a subscription driven business model. For instance, HBO Asia and Eros launched HBO Hits and HBO Defined – two new advertisement free premium priced movie channels. INTERNET USERS – As expected, mobile and wireless connections continued to drive the growth of internet penetration in India. By the end of 2012 there were 124 million internet connections in India, a rise of 41 percent over last year. Over last year fixed line connections grew by 11 percent. Over the same period, wireless connections have grown by almost 50 percent, outlining the importance of mobile data access in the overall digital economy. REGIONAL MARKET – Rising literacy, growth in disposable income, brand consciousness and strong commercial development in tier II and tier III cities. The majority of India‟s urban consumption comes from non-metro cities / Tier 2 and Tier 3 towns - regional markets with distinct cultures, languages and content preferences. India‟s smaller cities have delivered robust economic growth over the last 15 years, comparable with the largest. It is estimated these will add 160 million to the overall urban population and contribute to 49 percent of the urban GDP.
  • 11. Page 11 of 40 TABLE 1-GROWTH: LITERACY & MEDIA CONSUMPTION (SOURCE-IRS 2012 Q4) ALL FIGURES IN „000 FIGURE-1 RISING RURAL MARKET – Rural India accounts for 70 percent of India‟s population, 56 percent of National Income and 64 percent of the total expenditure. Union Budget 2013-14 has allocated INR 801 billion towards rural development schemes and INR 270 billion for agriculture. The budget has also fixed an annual agriculture credit target of INR 7000 billion in 2013- 14, up from INR 5,750 billion.
  • 12. Page 12 of 40 CHANGING LIFESTYLE- The Lifestyle and Infotainment genre saw a viewership growth of 12percent in 2012, with players expanding their offerings for Indian viewers through new channel launches, localization of content and audio feeds in multiple languages. Indian content accounts for 35 percent of programming on Fox Traveler and 20 percent of programming on NGC. Other channels are also looking at mix of international and local content. Discovery channel aired tailor-made Indian content like „Feast India‟ and „Rhodes across India‟, while Animal Planet broadcast a 52- week run of „India: Wild encounters‟. FM RADIO POLICY- The potential and viability of radio will grow many-fold once Phase III of FM policy is launched. In phase 3, many new frequencies will come up, taking radio to newer towns, which will help the market to expand and also enable growth of radio as a category. Majority of radio listenership comes from the age group of 20-40 years of age. TABLE 2-RADIO LISTENERSHIP AGE GROUP WISE (SOURCE-IRS Q3 2012) AGE GROUP % OF LISTENERSHIP <20 27% 20-40 48% >40 26%
  • 13. Page 13 of 40 1.3 GOVERNMENT REGULATIONS- Regulatory interventions have been a key enabler of growth for the sector. Anticipated developments in 2013 such as continued cable DAS rollout, Phase 3 licensing for Radio, and 4G rollout, will spur growth from the medium term. However, continued and unflinching government support is needed. There is a need for measures to aid curtailment of piracy and encourage investments to support further growth. TELEVISION Mandatory digitization of cable TV services was notified in November 2011. It will be implemented in following four phases – TABLE 3- PHASE OF DIGITIZATION IN INDIA PHASE CITIES DEADLINE 1 ALL METROS(Delhi, Mumbai, Chennai, Kolkata) 30 JUNE 2012 2 TIER 1 CITIES (having population more than 1 million) 31 MARCH 2013 3 TIER 2 CITIES (urban areas under municipalities and municipal corporations) 30 SEPTEMBER 2014 4 REST OF INDIA 31 DECEMBER 2014 TABLE 4: TAXATION ON CABLE AND DTH SECTORS
  • 14. Page 14 of 40 Cumulative tax on Customer Premise Equipment (CPE), 80% of which is imported and is expected to stay that way is very high. This has made the entry cost very high for the consumers. The digital distribution sector which is already subsidizing the STB for new customers, to provide their services at competitive rates is facing longer payback periods. Further, the high cumulative tax burden on services and equipment has become a major stumbling block for rapid Digitalization of the industry. Since the TRAI orders on the regulations on tariff and interconnection and the consumer complaint redressal system by MSOs have not yet been substantially implemented, this has resulted in delaying the installation of set-top boxes. On account of this and representations received from stakeholders, the MIB has extended the deadline of 30 June 2012 for Phase-I to 31 October 2012. The uplinking and downlinking guidelines have been revised effective December 2011. Some of the key changes introduced include the following: TABLE 5- TRAI REGULATIONS SEGMENT EXISTING LIMIT REVISED LIMIT Uplinking of non- news and downlinking First channel: 15 million INR Additional channels: 10 million INR First channel: 50 million INR Additional channels: 25 million INR Uplinking of news and current affairs First channel: 30 million INR Additional channels: 20 million INR First channel: 200 million INR Additional channels: 50 million INR Teleport services One-channel capacity: 10 million INR Six-channel capacity: 15 million INR Ten-channel capacity: 25 million INR Fifteen-channel capacity: 30 million INR First teleport: 30 million INR Additional teleport: 10 million INR SEGMENT TIME FRAME CONDITIONS Uplinking of non-news and downlinking One year from permission PBG of 10 million INR for each channel Uplinking of news and current affairs One year from permission PBG of 20 million INR for each channel Teleport services One year from permission PBG of 2.5 million INR for each channel Downlinking Same as 1 No PBG At least one of the persons occupying a top management position in the applicant company should have a minimum of three years of experience in a relevant media company. TRAI has issued tariff order and interconnection regulations for digital addressable cable TV systems on 30 April, 2012 with a view to ensure that consumers have the flexibility to choose their bouquet of channel and to budget their subscriptions accordingly. All channels will therefore be offered on an a la carte basis to subscribers. A „basic service tier‟ consisting of minimum 100 free-to-air channels has been prescribed with a maximum subscriber fee of 100
  • 15. Page 15 of 40 INR per month. The tariff order also covers the mechanism for revenue-sharing between MSOs and cable operators as well as the carriage fees charged by MSOs from broadcasters. The Cable TV Act which was modified in 2008 permitting telecom service providers to provide IPTV services RADIO TRAI has released the recommendations on prescribing minimum channel spacing, within a licence service area, in the FM radio sector in India. As part of the paper, TRAI recommends that frequencies for FM radio channels within a licensed service area should be released with a minimum spacing of 400 KHz. Unlike traditional radio, there are no license requirements. The internet radio is therefore accessible from any part of India. TABLE 6 - FDI IN THE BROADCASTING SECTOR As per Press Note 7 (2012 series) issued on 10 April 2012, the Government raised the existing foreign investment limits / liberalized the FDI norms in various key activities in broadcasting sector. Previous and the revised FDI limits in relation to broadcasting sector are tabulated below:
  • 16. Page 16 of 40 1.4 LEADING BUSINESS IN THE INDUSTRY – TABLE 7- LEADING MEDIA GROUPS IN INDIA (SOURCE- BUSINESS STANDARD) COMPANY/ GROUPS REVENUES-2013 (CRORE) THE TIMES GROUP (BCCL,TV,INTERNET,ENIL) 6700 ZEE GROUP (BROADCASTING, DTH, CABLE & NEWS) 6350 STAR INDIA 6100 BHARTI AIRTEL (VAS, DTH) 4270 SONY (BROADCASTING) 3120 NETWORK 18 (GROUPS) 2400 HT MEDIA (GROUP) 2048 SUN NETWORK 1923 DB CORPORATION 1592 PRASAR BHARATI CORPORATION 1553 JAGARAN PRAKASHAN 1525 HATHWAY GROUP (PUBLISHING & CABLE) 1500 RELIANCE (ADAG-MEDIA) 1490 KASTURI & SONS 1100 MALAYALA MANORAMA 1100
  • 17. Page 17 of 40 1.5 ESTIMETED SIZE OF THE INDUSTRY – The Indian M&E industry grew from INR 728 billion in 2011 to INR 821 billion in 2012, registering an overall growth of 12.6 percent. Given the impetus introduced by digitization, continued growth of regional media, upcoming elections, strength in the film sector and fast increasing new media businesses, the industry is estimated to achieve a growth rate of 11.8 percent in 2013 to touch INR 917 billion. The sector is projected to grow at a healthy CAGR of 15.2 percent to reach INR 1661 billion by 2017. TABLE 8-OVERALL INDUSTRY SIZE AND PROJECTIONS (SEGMENT WISE) SOURCE – KPMG, 2013
  • 18. Page 18 of 40 1.6 TRENDS IN SALES OVER RECENT YEAR – a. DIGITIZATION OF FILM AND TV DISTRIBUTION INFRASTRUCTURE – Digitization of distribution has brought in the promise of more sustainable and profitable business models across media sectors. The year 2012 heralded the much awaited start to digitization of cable. Despite some hiccups, Phase 1 saw significant progress in implementation of mandatory digital access system (DAS) across the four metros. Industry now hopes to realize benefits over the medium term – including enhanced ability to monetize content, greater transparency and equitable revenue share across the value chain, lower burden of carriage fees and hence increased ability to invest in differentiated and sophisticated content. Digital distribution has also enabled the films sector to make a comeback this year. The industry has achieved 77 percent digitization of screens and expects to be close to 100 percent digitized in the next 18 months to 2 years. Today 80-90 percent of films are distributed digitally vis a vis 50 percent physical prints in 2010. b. GROWTH IN NEW MEDIA The rapid increase in mobile and wireless connections continued to drive the growth of internet penetration in India. With better access, through cheaper and smarter devices, audiences (especially youth) are consuming more content and are getting increasingly engaged. Going forward, better uptake of 3G connections and the beginnings of the 4G rollout are expected to spur growth further. 4G technologies will enable greater uptake in services including Live TV, HD video/ audio streaming, real time online gaming, high speed data downloads and uploads and could enable introduction of new innovative offerings. The industry looks forward with great hope to an aggressive rollout of this technology by the telcos. c. WITH TRADITIONAL MEDIA STILL GOING STRONG India remains a growth market for „traditional‟ media evidenced by the growth last year in TV audiences, radio listenership, and footfalls in theatres. India is an outlier country where print is still a growth market. There is growing overseas demand for quality Indian animation/ VFX work at affordable pricing. d. GREATER SOPHISTICATION OF AND SEGMENTATION IN CONTENT A key outcome of the push in digitization will be the ability to increase production budgets and invest in differentiated genres and multilingual content. Phase 3 licensing, and anticipated provisions for permitting multiple frequencies in a city, would encourage investments in differentiated content for the Radio sector. Internet and mobile platforms are a cost effective enabler to reach diverse audience segments with tailored content. For example, special genre internet radio stations of players such as Radio Mirchi, Radio City, and multiple genre music libraries available for download online.
  • 19. Page 19 of 40 e. REGIONAL MARKETS REMAIN KEY CENTERS OF GROWTH Advertisers continue to see higher growth in consumption from key regional markets. Hence regional media continues on a strong growth trajectory especially in the print and television sectors. Key media players are focusing on selectively expanding their presence in regional markets that are seeing higher rates of advertising revenue growth, and better insulation from slowdown than metros, which may be close to saturation in many cases. For example Bennett Coleman & Co. launched Bengali daily „Ei shomoy. Zee and Star both launched their Bangla movie channels – Zee Cinema Bangla and Jalsha Movies. Star owned Asianet Communications also launched Asianet Movies, the first satellite movie channel in Malayalam. f. COMING LIVE TO YOU With changing lifestyles, there is an increase in media consumed out of home. Brands are also increasingly keen to connect with consumers via „experiences‟ to ensure greater recall and amplification of brand values. Live music events/ festivals have been successful in attracting widespread audiences and engaging youth across key cities. Increased consumption of music/radio/ video on-the-go via mobile and in cars provides opportunities for real time mobile, location-based advertising. There is hence an increased need to provide 360 degree solutions to advertisers and provide multiple platforms to reach out to consumers wherever they are. g. REVENUE MODELS STILL ADVERTISING DEPENDENT M&E is still an advertising dependent industry in India. Hence it remains sensitive to the impact of business cycles. While the print sector saw some increases in circulation revenues, and increases in cover price in some areas, cover prices still remain significantly lower than global counterparts. Established practices, competitive pressures from within the sector and from TV, and the threat of digital migration, are likely to keep prices under pressure. In the TV sector, digitization has the potential to increase ARPUs and improve the share of subscription revenues to the broadcasters. Early indicators suggest that carriage costs have already dropped somewhat in Metros after Phase 1 digitization.
  • 20. Page 20 of 40 TABLE 9-ADVERTISING REVENUE (IN BILLION) SOURCE – KPMG, 2013 1.7 CURRENT OPERATIONAL/ MANAGEMENT TRENDS – FIGURE 2-TV VALUE CHAIN (SOURCE – DELOITTE ANALYSIS)
  • 21. Page 21 of 40 FIGURE 3 -FLOW IN ANALOGUE AND DIGITILAZATION SYSTEM (SOURCE – DELOITTE ANALYSIS) FIGURE 4 -THE DIGITAL CONSUMER AND DISRUPTIVE TECHNOLOGIES (SOURCE-KPMG)
  • 22. Page 22 of 40 1.8 MARKET STRATEGIES PREVALENTS – CONTENT INNOVATION AND MULTI PLATFORM DELIVERY Digitization will provide an opportunity for multiple channels to enter the market, adding to the overall content clutter. But this will also enable players to experiment with new business models relying primarily on subscription revenue, as compared to the traditional dependency on advertising. Thus, broadcasters can focus on establishing niche market positions, driven by the type and quality of content delivered, to differentiate themselves from competition. In the medium term, increasing online and mobile connectivity and usage will also drive multiplatform delivery of content. INCREASING INTEREST BY TELECOM COMPANIES Recently, the multi-crore investments by Reliance in Network18 Group and acquisition of 27.5% stake in Living Media by Aditya Birla Group supports long held desire of telecom companies to get access to media content to expand their businesses. These deals follow global trend of telecom companies moving forward from being carrier to content provider. Telecos have realized that quicker access to superior content will act as key differentiators for the companies and provide them with a competitive edge. These deals help media companies accomplish their desire to build scale and go national. GO NATIONAL As players with national hold are preferred by advertisers which enable them to garner better rates and higher ad volumes, any inorganic expansion will only be beneficial to the company. Stake sale to Aditya Birla Group is most likely the result of Living Media‟s attempts to raise funds to expand its print business. The company plans to start the Mumbai edition of its existing property Mail Today and may possibly want to get into the Hindi newspaper market to reap benefits of the high Hindi speaking population of the country.
  • 23. Page 23 of 40 FIGURE 5 : VIEWERSHIP ACROSS TV GENRES IN INDIA (%) SOURCE -TAM
  • 24. Page 24 of 40 DECREASING DEPENDENCE ON PRINT The recent formation of an equal JV with US firm Apollo Global Inc, an expansion into education industry. Amar Chitra Katha Private Ltd‟s (ACK) plan to get in amusement park business is another example of increasing diversification by players in print. MEDIA OWNERSHIP In the absence of cross-media restrictions and with government policies contributing to further corporatization, especially with respect to the television medium, diversity of news flows could be adversely affected contributing to the continuing privatization and commodification of information instead of making it more of a “public good”. The absence of restrictions on cross- media ownership implies that particular companies or groups or conglomerates dominate markets both vertically (that is, across different media such as print, radio, television and the internet) as well as horizontally (namely, in particular geographical regions). THE BOTTOM-LINE, NOT THE BY-LINE Media companies tend to have a variety of professionals on their boards, such as investment bankers, venture capitalists, chartered accountants, corporate lawyers, and CEOs of big companies. Professional journalists, ironically, rarely figure. As a result, those at the top of the decision-making hierarchy are those for whom the bottom-line, not the by-line, is most important.
  • 25. Page 25 of 40 1.9 SENSITIVITY TO ECONOMIC FLUCTUATIONS – The high dependence on advertisement revenues resulted in the growth of print industry being dampened by poor macro economic performance of the country. In 2012-13, the Indian economy slowed down its growth momentum-registering a growth of only 5 percent as compared to 6.2 percent in 2011-12. The slowdown can be attributed to a host of factors such as high interest rates to curb inflation, investment bottlenecks that slowed down corporate and infrastructure investment and poor global economic conditions that took a toll on India‟s exports. All this has resulted in advertisers adopting a cautious approach towards their marketing initiatives-leading to relatively muted growth in overall advertising spends. In such challenging times, the Indian print industry has adopted a pragmatic approach with most print players now focusing on consolidating their position in core markets and penetrating them further through the launch of new editions rather than entering newer territories. The industry has also made efforts to save the bottom line by effectively managing operating costs. FIGURE 6 -ADVERTISING & CIRCULATION REVENUE SHARE
  • 26. Page 26 of 40 TABLE 10-TOP CATEGORIES ADVERTISING ON PRINT
  • 27. Page 27 of 40 NEWSPRINT PRICES ANTICIPATED TO BE STABLE BUT RUPEE DEPRECIATION STILL A RISK The print industry continued to derive most (94 percent) of its revenues from the newspaper category. Newsprint typically accounts for 40 to 50 percent of a publisher‟s cost base. The total newsprint demand in India was 2.1 million MT in FY 2012. Of this, approximately 1 million MT of newsprint was produced and procured locally, while 1.1 million MT (approximately 50 percent of total demand) was imported from international newsprint producers. FIGURE 7 - BREAK UP OF DOMESTIC AND IMPORTED NEWS PRINT CONSUMPTION
  • 28. Page 28 of 40 2. INDUSTRY DEVELOPMENT, NEWS, INNOVATIONS DEVELOPMENT TABLE 11- KEY TRANSACTION IN 2012
  • 29. Page 29 of 40 NEWS BARC The broadcasting and advertising industries have long been vocal about the need for more competition in the television ratings measurement service in India. With this objective, Broadcaster Audience Research Council (BARC) was initially registered in July 2010, after being in plans for six years and was launched in March 2012. BARC is a joint body of advertisers and broadcasters with three shareholders – Indian Broadcasting Foundation (IBF), Advertising Agencies Association of India (AAAI) and Indian Society of Advertisers (ISA). IBF holds 60 percent in the JV, with the balance 40 percent equity being shared by AAAI and ISA. BARC is reported to be formed on similar lines as BARB (Broadcast Audience Research Board) that compiles audience measurement and television ratings in the UK. BARC is reported to be targeting a sample size of 30,000 households. The broadcasting industry has indicated that transparency is a key pillar for BARC, which has decided to segregate the functions of data collection, analysis and reporting between three independent agencies. INCREASING HD CHANNELS Increasing digitalization and need for differentiation coupled with penetration of LCD and LED screens would propel more channels to launch HD feeds. 2010 saw launch of two HD specific channels Food Food, a food specific channel and Movies Now, English movie channel. Other big launch was by BIG-CBS, a joint venture between RBNL and CBS, which launched three channels, BIG Prime, BIG Spark and BIG Love targeted specific at urban audiences. The competition amongst broadcasters is expected to increase further with Government approving 75 licenses for launch of new channels or re launch of existing channels in HD after a two year freeze. The major players who are launching new channels and HD channels are Discovery, UTV, Fox, ZEE and STAR amongst others. RADIO LICENSE With the roll-out of Phase III where the licence period has been increased from 10 to 15 years for the radio industry relieving the pressure off radio companies. The TRAI has also released its paper on Prescribing Minimum Channel Spacing, within a Licence Service Area, in FM Radio Sector in India. As part of the paper, TRAI recommends that frequencies for FM radio channels within a licensed service area be released with a minimum spacing of 400 KHz. With multiple frequencies being allowed to a broadcaster in the same city, we expect radio channels to focus on niche customer segments and offer quality content to existing listeners.
  • 30. Page 30 of 40 INNOVATION DIGITAL PLATFORMS Globally, the print industry has witnessed a decline in its subscription and advertising revenues due to the steady shift of consumers towards new media platforms such as the internet and mobile. The ability to attract online readers to pay for content will be the key differentiating factor. The winners will be those who can create value for their content and facilitate on-demand aggregation far more efficiently than they have done till date. SOCIAL MEDIA In line with the global scenario, social media and network are occupying more online time in the country. Facebook alone accounts for more than a fifth of the total time spent online by users in India. Many newspapers have content that can be shared by users on their social media pages, besides having interactive pages on different social media sites. CONTENT REPURPOSING Traditionally TV content is aired in predefined timeslots on Television within a limited period. However, to sustain in a highly competitive Indian television industry, the content owners have to identify new revenue sources from the existing content. One of the immediately deployable solutions could be repurposing of the existing content. Repurposing can be done through the conventional television media or through emerging media like smart phones, internet access through desktops and laptops, 3G/4G enabled handheld devices etc. The final aim of repurposing is make the content available through cataloging and categorizing it in such a way that it would be able to reach the right audience at the time and through the medium of their choice. CONVERGENCE The term convergence describes two trends: the ability of different network platforms (broadcast, satellite, cable, telecommunications) to carry similar kinds of services; and the merging of consumer devices such as telephones, televisions or PCs. From a technology perspective, the twin forces accelerating convergence are increased broadband penetration and increased standardization of networks and devices to use the Internet Protocol (IP).Convergence collapses previously distinct media distribution channels (for example, broadcast/cable television, radio, print, online) into a single delivery chain. A converged infrastructure supports a range of interaction modes between users and content. Moreover, the open transport and interface protocols of IP mean that access to content has become largely network and device independent. Fundamentally, convergence affects the two-step process at the heart of any media-based industry – content creation and transport. The first step entails selecting, packaging and encoding content into a medium. The second step transports content to its destination and then decodes it for use. In most instances, it is the second step that defines a particular media market, which influences the form taken by the content in the first step. With Micro max and similar low-cost players entering the tablet market fray, and the easy access to high speed internet could also bring about traction amongst tablet users. Higher engagement experiences such as long form reading and interaction games are naturally suited to the medium, and present opportunities for niche production and magazine (travel magazine, for instance, can
  • 31. Page 31 of 40 use the platform to create compelling multimedia travelogues ) to foster additional reader engagement. FIGURE 8 -EVOLUTION OF PLATFORM CONVERGENCE
  • 32. Page 32 of 40 3. CONSUMER MARKET DATA A global Deloitte study on „Media democracy‟ in 2010 across over 2000 respondents confirms the domination of TV and throws some interesting insights. Media consumption habits of consumers in Metro & Tier 1 cities in India closely resemble the sophistication to that of consumers in developed markets, like the UK and the US. On the other hand, media consumption habits of consumers in Tier II cities and rural areas are less sophisticated. However, TV remains a favorite media source for most consumers across age irrespective of domicile: 92% of the respondents rank „watching TV‟ as their top media source while 94% respondents consider „advertising on TV‟ as the most influential media source to impact their buying decisions. While the media & entertainment market (M&E) in India is relatively small when compared with other countries, India has the third largest television market, in terms of number of viewers after China and the US. TV continues to dominate the M&E sector followed by print and filmed entertainment. FIGURE 9 : EXTRACT OF DELOITTE MEDIA DEMOCRACY SURVEY 2010
  • 33. Page 33 of 40 3.1 GEOGRAPHIC REGIONAL Regional channels accounted for approximately 26.6 percent of total television viewership in 2012. Regional channels are estimated to account for approximately 30 percent of total revenues of Star and Zee networks. MSM entered the Telugu market in 2012 with the acquisition of Maa TV and is reported to be looking at expansion in at least three regional markets. Last year, Network 18 group had acquired Eenadu TV which has its presence across 6 key regional markets. Regional channels command an advertising market share of 27.2 percent, which is proportionate to their viewership share. Advertising interest in regional markets is strong and broadcasters see immense potential for revenues from local advertisers who may be willing to pay a premium to reach their targeted audience. growing advertiser interest in regional markets has led to music channels looking at further expansion in the regional markets. 9X Media Pvt. Ltd. launched two new regional music channels in Punjabi and Marathi market - 9X Tashan and 9X Jhakaas, respectively. CNEB launched a new Bhojpuri music channel, „Hummra M‟. RURAL The traditional vision of the rural economy as purely agricultural is clearly obsolete. There are significant changes i.e. increasing income, rising education and technology penetration as well as globalisation that are enabling exposure and awareness. According to the National Sample Survey (Household Consumer Expenditure in India 2009 –10) the average monthly per capita expenditure in 2009 –10 was estimated at INR 1053.6 in rural India. This accounts for 60 percent increase over 2004 – 05.
  • 34. Page 34 of 40 TABLE 12 -HIGH DEPENDENCE OF COMPANIES ON RURAL MARKETS 3.2 DEMOGRAPHIC LANGUAGE In the print sector, revenues from Hindi and vernacular segments are fast catching up with English, which has, to date enjoyed a majority share of the value. Hindi and vernacular language publications have always enjoyed a healthy readership base. In 2012, nine out of top ten dailies being published were either in Hindi and vernacular language publications. However, in the past this segment had lagged in its ability to effectively monetize. FIGURE 10 -VIEWERSHIP SHARE OF REGIONAL CHANNELS
  • 35. Page 35 of 40 KIDS The Kids genre delivers 500-600 GRPs per week, and is the largest genre after the Hindi and regional GECs. Advertisers are increasingly recognizing the power of reaching kids who are emerging as key influencers in several household purchasing decisions. The genre witnessed a growth of 20 percent in its advertisement revenue share in 2012, as compared to 5 percent in 2011. Total advertisement market for the Kids genre is estimated at INR 2.6 billion in 2012. YOUTH Channel [V] effectively exited the music genre, replacing music with youth focused fiction and non-fiction programming and may be looking for higher advertisement rates with its new positioning as a youth GEC channel. Digital extensions of music channel brands onto online platforms, including pads and phones will drive revenue growth and will need to be considered in the medium term. 3.3 PSYCHOGRAPHICS MUSIC While the music genre continues to be a very competitive space, viewership share increased from 2.7 percent in 2011 to 3.1 percent in 2012. However, 2012 saw the genre approach a „hyper- competitive‟ scenario with a large number of channels competing for the viewer mind-share and time-share. With Hindi film music dominating the content on music channels, content differentiation has always been a challenge. Broadcasters are now looking at specialized music channels to engage viewers. 9XM launched two new niche music channels – 9XO which runs international music content and 9X Jalwa which features timeless „Bollywood‟ hit songs. NEWS The news genre consists of general and business news in Hindi, English and regional languages. Hindi and regional news account for 50 percent and 5 percent of total news viewership, respectively. In 2012, news viewership declined by 15-20 percent, with English News channels impacted more than Hindi channels. SPORTS After an increase in 2011, the sports genre saw a 26 percent decline in viewership and a proportionate decline in its advertisement share in 2012. This is attributed to the absence of a mega sporting event like the Cricket World Cup in 2011 and a muted advertiser response to season 5 of IPL. LIFESTYLE AND INFOTAINMENT The Lifestyle and Infotainment genre saw a viewership growth of 12 percent in 2012, with players expanding their offerings for Indian viewers through new channel launches, localization of content and audio feeds in multiple languages. The Lifestyle and Infotainment genre, like the English GEC genre, commands an advertisement share disproportionate to its viewership share.
  • 36. Page 36 of 40 Increasing competition in the genre indicates that more broadcasters are eyeing the INR 3.452 billion infotainment market. Sub-genres within niche genres is a growing trend, and the Infotainment genre has seen several channels over the last 2-3 years focused on interests as diverse as history, adventure , travel, cooking and lifestyle. While spends from traditional advertisers have been under pressure, varied programming is bringing in more international advertisers like tourism boards promoting international destinations, and ready-to-eat food companies, as infotainment channels focused on sub-genres help them reach a targeted audience. According to IRS and RAM, people are spending more time listening to radio as compared to the time spent on other mediums such as television and print. The increased engagement with radio is because it is consumed throughout the day and also there is a consistent increase in out-of- home listenership through mobile and car stereo. TABLE 13 -MOBILE AND OUT OF HOME LISTENERSHIP SUBSCRIPTION DRIVEN NICHE CHANNELS Impending digitisation has encouraged a few broadcasters to take a leap of faith in launching specialty, advertisement free and niche channels, particularly in the Kids genre. Many of these channels are available only on digital platforms in order to develop a subscription driven business model. Discussions indicate that by the time digitisation approaches completion, broadcasters want their offerings to achieve significant maturity amongst their target audiences so as to benefit from increase in subscription revenue and achieve premium advertisement rates. For instance, HBO Asia and Eros launched HBO Hits and HBO Defined – two new advertisement free premium priced movie channels.
  • 37. Page 37 of 40 4. COMPETITOR INFORMATION TABLE 14 - A COMPARISION COMPANY THE TIMES GROUP ZEE GROUP STAR INDIA BHARTI AIRTEL COMPETITOR NEWS- ABP, HINDUSTH AN TIMES, KASTURI & SONS,TV- ZEE, STAR, RELIANCE, RADIO- RELIANCE TATA SKY, AIRTEL DTH, VIDEOCON D2H AND CABLE TELEVISION. SONY BROADCASTIN G, STAR INDIA ZEE GROUP‟S CHANNEL, SONY BROADCASTIN G TATA SKY, DISH TV VIDEOCON D2H AND CABLE TELEVISION LOCATION MUMBAI MUMBAI, DTH- NOIDA, MUMBAI BHARTI CRESCENT, 1, NELSON MANDELA ROAD, NEW DELHI, INDIA SINCE 3 NOVEMBE R 1838, 15 DECEMBER 1991 DTH-2004, NEWS- 31 MARCH 2006 1 AUGUST 1991 DTH-9 OCTOBER 2008 MARKET SHARE 6TH TOI- 7653000 DAILY AS OF 31 OCTOBER 2012, DISH TV HAD ABOUT 13 MILLION CUSTOMERS 62% SHARE IN VIEWERSHIP AND A 50% SHARE OF THE TOTAL ADVERTISING REVENUES OF THE INDIAN TELEVISION MARKET DTH=7.9 MILLION CUSTOMERS AT THE END OF DECEMBER 2012. STRATEGIES MOVE FIRST, MOVE FAST - MULTIPLE TIES - CONTINUO US TO BE THE LEADING ROUND THE CLOCK AIR- TIME PROPERTIES PROVIDER, DELIGHTING PROVIDING SUPERIOR SERVICE- TARGET CUSTOMERS AND COME WITH NEW IDEAS AND AIRTEL IS CREDITED WITH PIONEERING THE BUSINESS STRATEGY OF OUTSOURCIN G ALL OF ITS
  • 38. Page 38 of 40 INNOVATI ON (PRIVATE TREATIES) - SMART- SENSING THE FUTURE THE VIEWERS ON ONE HAND AND PROVIDING VALUE TO THE ADVERTISERS FOR THEIR TIME AND MONEY ON THE OTHER. TO ESTABLISH THE COMPANY AS THE CREATOR OF THE ENTERTAINME NT AND INFOTAINMENT PRODUCTS AND SERVICES TO FEAST THE VIEWERS AND THE ADVERTISERS. ENTERTAINME NT SHOWS TO SERVE THE VIEWERS BUSINESS OPERATIONS EXCEPT MARKETING, SALES AND FINANCE AND BUILDING THE 'MINUTES FACTORY' MODEL OF LOW COST AND HIGH VOLUMES. OPERATIONAL STRATEGIES EDITORIA L VALUE ADDITION EG. THE TIMES OF INDIA ON MOBILE – AUDACIO US PRICING- LION IN PRICE WAR ENHANCED CONTENT AND PROGRAMMING EXPAND ITS CHANNEL BOUQUET OFFERING CABLE AS WELL AS SATELLITE DISTRIBUTION FOCUS ON SHAREHOLDER VALUE ENHANCEMENT MAINTAIN HIGH STANDARD OF CORPORATE GOVERNANCE AGGRESSIVE PROMOTION AND PACKAGING, CONCENTRATE ON EACH AGE GROUP OF VIEWERS AND BROADCAST PROGRAMMES AT SPECIFIC TIME, AIRING A POPULAR HINDI MOVIE IN THE SAME TIME SLOT WHERE COMPETITORS' MAIN PROGRAMME IS AIRED THE DIGITAL TV SERVICES PROVIDES CUSTOMERS WITH A UNIQUE TV VIEWING EXPERIENCE WITH A WIDE VARIETY OF CHANNELS AND PROGRAMMES AND WITH THE ON- DEMAND CONTENT ON AIRTEL LIVE. INVEST MORE ON TECHNOLOGY , AIRTEL CURRENTLY
  • 39. Page 39 of 40 HAS 1,200 CHANNELS PARTNERS AND OVER 1.1 LAKH RETAIL TOUCH POINTS, LARGEST REACH FOR ANY DTH PLAYER TODAY, U.S.P ACQURE EVERY MEANS OF MEDIA DISH TV LAUNCHED ITS HIGH DEFINITION SERVICE CALLED DISH TRUHD IN THE YEAR 2010. WITH THIS SERVICE, SUBSCRIBERS CAN ENJOY 5X PICTURE CLARITY ON THEIR HDTV, A 16:9 WIDE ASPECT RATIO AND 5.1 SURROUND SOUND, DISH TV RECENTLY INTRODUCED ITS DVR SERVICE WHICH REQUIRES AN EXTERNAL USB HARD DISK DRIVE TO BE PLUGGED INTO THE SET TOP BOX'S USB PORT, THE DVR CAN PROVIDE & 33 CHANNELS IN EIGHT LANGUAGES. AIRTEL DIGITAL TV ON OCTOBER 2010 LAUNCHED A NEW WAY FOR PEOPLE TO ENJOY LIVE TV ON THE MOVE, IN FORM OF IN- BUS ENTERTAINM ENT. A MULTI TV SCREEN MOBILE VEHICLE DTH SOLUTION WITH INSTALLATIO N OF ITS CONNECTIONS IN RAJASTHAN STATE ROAD TRANSPORT CORPORATIO N SUPER LUXURY VOLVO BUSES PLYING ON DELHI – JAIPUR HIGHWAY
  • 40. Page 40 of 40 SUPPORT RECORDING SPACE UP TO 2 TB