| Media Keeps You Entertained |
Good times seem to be in store for the entertainment industry. As
per an Arthur Andersen - FICCI study - 'Indian entertainment industry: Envisioning for
tomorrow.' the entertainment industry is expected to grow from its current size of Rs
10,000 crores to Rs 31,500 crores by 2005.
The analysis stems from the fact that the revenues of the Indian entertainment industry
are currently much lower than other countries. "In the global economy, a country's
total advertising expenditure and its Gross Domestic Product have strong positive
correlation. In India, the ratio of advertising expenditure to GDP is about 0.4 per
cent,'' the report said. This is quite low compared to other developed economies - US (1.3
per cent), UK (1.1 per cent), Germany (0.9 per cent) as well as developing economies -
Brazil (1.6 per cent), Thailand (0.9 per cent) and Indonesia (0.7 per cent). The report
goes on to say that as the Indian economy develops, its advertising expenditure to GDP
ratio is expected to increase to 0.65 percent of its GDP over the next five years.
Currently, in India, the share of print media in total advertising expenditure is as high
as 55 per cent while internationally the average share is 45 per cent. Convergence and
broadband is expected to enable digital delivery of content through secured addressable
systems and lead to high growth in revenues and margins. The report also highlights the
potential of entertainment exports which currently stand at Rs 2300 crore and are expected
to witness strong growth.
This in depth study pegs the overall success of the entertainment industry on the revenues
earned from advertisements, sponsorships, ticket sales and subscription revenues.
According to the report the advertisement industry is expected to touch 0.5 per cent of
GDP in the next five years from the present size of 0.4 per cent of GDP. Further,
internationally, the average share of print media in the total advertising expenditure is
about 45 per cent. Currently, in India, the share of print media in total advertising is
as high as 55 per cent. This is expected to come down to international levels as the
penetration levels of other media increases, the report stated. Therefore, the advertising
revenues accruing to non-print media will increase over the next few years. This will
result in healthy growth of the entertainment industry,'' it said.
While recommending measures for the film segment of the entertainment industry, the report
suggests that there is a compelling need to expand and spruce up film exhibition
infrastructure. To reach a global size in television software, the Indian content
companies need to invest substantially in infrastructure and expand operations rapidly
across media segments. At present, in India, television software companies follow diverse
accounting practices and there is a lack of uniformity in presentation of financial
information. The industry, alongwith the Institute of Chartered Accountants of India
(ICAI), should formulate standard accounting policies, in line with international norms.
While on the live entertainment and event management segment of the industry, the report
observed that the segment has grown from a miniscule size of about Rs 2 crore a decade ago
to the present size of Rs 150 crore. With corporates increasingly using events to
communicate with their target consumers and the rising popularity of live entertainment
events, the segment is poised to grow rapidly. The report concludes by saying that
“The ingredients for success are present but the growth drivers need to be enabled by
the Government and industry through implementation of the various regulatory and policy
measures.
There are a number of media stocks listed on the market. Balaji Telefilms, Mukta Arts,
Crest Communication etc. Investors can concentrate on the leaders like Balaji Telefilms
and Mukta Arts. Most of the mutual funds which have exposure to these stocks are heavy in
infotech stocks. So perhaps investors could accumulate the scrips directly at dips.
Aru Srivastava
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