'Media

Mumbai, Nov 28: Driven by healthy growth and changing distribution structure, media and entertainment industry in India will double its revenues by 2010 with an annual growth rate of 15.6 per cent, according to a Crisil report.

The country's leading ratings and research company projected the M&E revenues to grow to Rs 744 billion in 2010 from Rs 361 billion in 2005.

''The media and entertainment sector is expected to be one of the key beneficiaries of the increase in discretionary spending by the Indian consumer,'' Crisil research head Nagarajan Narasimhan said. He said all segments in the industry are projected to grow, but growth in television and radio segments would be particularly impressive. But the music industry is expected to continue to show tepid growth, he added.

''Presence of multiple players, greater choices to consumers and investor interest have spurred growth in the sector so far,'' Nagarajan said, adding convergence is now expected to increasingly influence the future growth in the sector. '' Convergence is changing the way consumers consume content and the way content is delivered to consumers. This will require payers to re-tool and adapt their business models to flourish in an increasingly converged world.'' '' Conventional distribution mechanisms in the industry are expected to change. This, in turn, will influence the bargaining power of the different players in the value chain, as also the form taken by content,'' said Nagarajan.

''In television, we expect the balance of power to shift in favour of broadcasters with the adoption of alternative distribution platforms such as DTH (Direct-to-Home), CAS (Conditional Access System), and IPTV (Internet protocol television).'' He said the implementation of digital technology and the advent of multiplexes as the preferred movie-viewing alternative is fast changing the way movies are distributed and seen, and the world of music distribution is rapidly going digital and mobile.

While projecting buoyant growth for the M&E sector, Crisil expects the profitability of industry players, especially that of established large players, to remain strong. '' Television broadcasters are expected benefit from an increase in satellite television subscribers as well as increasing transparency in the cable distribution system,'' but the recent government's cap on pay channel prices in the CAS notified areas is a negative for broadcasters.

''The demand for television content is bound to increase significantly, but profitability would hinge on the ability of content producers to identify audience tastes and preferences and control programming costs.'' The study expects the financial performance of newspaper publishers to be healthy over the medium-term, as a result of increased circulation and readership. But smaller players may face margin pressures due to price cuts by big publishers keen on creating and growing their markets as also high newsprint costs.

As for films, Crisil expects the profitability of players in the multiplex cinemas space to improve, but increasing bargaining power of producers, high real estate prices, increasing competition, and the eventual loss of entertainment tax benefits are potential downsides to profitability. '' With the economics of film production improving, the financial performance of players should also improve, as long as time and cost budgets are kept under control.'' But at the same it said '' Profitability of film distributors will remain volatile.

''The changes in the FM radio licensing regime and expected growth in advertising spends channelled towards radio bode well for existing players as well as new entrants in the nascent radio broadcasting segment, the report said. For players in the music industry, profitability and growth would be critically dependent on their ability to monetise content in non-physical form and also controlling their fixed costs, it added.

UNI