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Media Sector Analysis Report 

[Key Points | Financial Year '09 | Prospects | Sector Do's and dont's]

  • India continues to be in the throes of an entertainment revolution spawned by economic liberalisation. The industry comprises of print, electronic, radio, internet and outdoor segments. The size of the print segment is about Rs 173 bn, while the radio and internet segments are about Rs 8.4 bn and Rs 6.2 bn respectively. Advertising revenue will continue to be the industry's growth driver.
  • There are over 120 m television households, and over 80 m cable and satellite connections in India. The DTH segment comprises of 12 m homes. It is expected that there will be 149 m television households in India by 2013, out of which 127 m are expected to have cable and satellite connections. The players in the electronic media can be classified into a three-link chain. First are the studios (including the animation studios), which comprise the hardware part of the industry, the second are the content providers and the third link comprises the distribution trolleys, which include the cable and satellite channels, multiplex theatres, MSOs and the DTH players.
  • In India, the ratio of advertising expenditure to GDP is about 0.4%. This is substantially lower in comparison to the developed economies as well as developing economies. As the Indian economy continues to develop and the media reach increases, the advertising expenditure to GDP ratio is expected to increase over the next 5 years.

How to Research the Media Sector (Key Points)

  • Supply
  • Indian has more than 600 English dailies and 7,400 Indian language dailies. In the electronic media, the total number of channels presently available to viewers in India stands at close to 500.
  • Demand
  • The demand for regional print media is growing at a faster pace than that of English language print media. In the electronic media, the highly fragmented viewership has led to an increasing preference for niche channels.
  • Barriers to entry
  • In the electronic media, it is high for broadcasting since it is very capital-intensive. It involves the cost of leasing the transponder, setting up up-linking facilities, setting up pre and post-production facilities. The barriers to entry are far lower for content providers. Besides, broadcasters themselves commission programmes and finance their production. Hence margins are lower. The broadcasters are finding it increasingly difficult to retain their key personnel. Inspite of the high barriers to entry a slew of channels across languages and genres have been launched in the recent past.
  • Bargaining power of suppliers
  • In the print media, high for newsprint suppliers. Medium to low for content providers in the electronic media. Terrestrial broadcasters such as Doordarshan and regional broadcasters such as Sun TV actually commission time slots to content providers.
  • Bargaining power of customers
  • Relatively high in both print and electronic media. The consumer finds a surfeit of players to choose from. The rollout of CAS and DTH services will enable the consumer to choose the channels that he wishes to view increasing his bargaining power.
  • Competition
  • High in print media, especially in Hindi dailies. The print sector includes listed entities like Jagran Prakashan, HT Media and Deccan Chronicle. Also high amongst broadcasters especially for general entertainment channels. The space includes listed entities like Zee TV, TV 18, UTV, NDTV and Sun TV.

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Financial Year '09

  • The Indian media and entertainment industry recorded a growth of around 12% over the previous year. With this, the industry in India reached an estimated size of Rs 584 bn, up from Rs 520 bn in 2007. The growth rates of the different segments of the industry during the year were 8% for print advertising, 18% for TV advertising and 59% for online advertising.
  • As per the Pitch-Madison Survey, print accounted for the largest share of ad-spend in calendar year 2008 with 47.4%, followed by television 40.2%, outdoor advertising 6.8%, radio 3.2%, Internet 1.7% and cinema advertising 0.6%. The total ad-spend in calendar year 2008 was estimated to be Rs 207 bn, a 17% increase compared with 2007. Print media ad-spend increased by 16% as against 17% increase in television ad-spend in calendar year 2008.
  • The share of print media in the total advertisement pie has fallen from 47.9% in calendar year 2007 to 47.4% in the calendar year 2008. Television has maintained its market share at 40.2%. Hindi language newspapers increased their share in total advertisement pie to 27% from 24.4% at the cost of English and some other regional language publications.

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Prospects:

  • The future of the entertainment industry will be decided on the interplay of a number of reasons like consumerism, advertising spend, content, pricing, technology and regulation. Internet advertising is expected to be the fastest growing segment over the next 5 years at compounded annual growth rate (CAGR) of 28%, followed by radio advertising at 14.2%, television advertising at 13.5% and print advertising by 10%. Taken together, the Indian media industry is set to grow at a CAGR of 12.5% per annum in the next 5 years.
  • The demographic profile of India also favours higher spends on entertainment, with the consuming class forming a sizeable chunk of the country's total households. Thus, this could lead to the emergence of a huge consumer base for the various products and services (including entertainment).
  • New distribution technologies like DTH, Conditional Access System (CAS) and IPTV, hold the future of the media industry as increasing digitalisation will radically alter the ways in which consumers receive channels. Also, these distribution platforms will give broadcasters direct access to consumers providing not just routine content but also customized value added services (like video on demand). As a result of this, the average revenue per user will increase significantly. Moreover, broadcasters are also expected to rake in larger advertisement revenues, as ad spend is likely to go up on the back of the robust economic growth.

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Related Links for Media Sector
Quarterly Results | Sector Quote | Over The Years

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