The mystery of missing media mergers
hy don’t we see more merg- uals. Add thousands of
W ers and acquisitions (M&As)
in media? According to VC-
CEdge, a financial research platform
of VCCircle.com, 22 (or 5 per cent of
449) M&A deals in corporate India came
from media and entertainment in 2009.
This is down from 37 (or 6 per cent
of 542) in 2008. On value, the share
of media and entertainment is even low-
er — 1.24 per cent (of $16.2 billion)
in 2009, down from 2.2 per cent (of $27.8
billion) in the previous year.
As capital flows liberally into the sec-
tor, as it has since 2007, one would have
expected more consolidation-driven
growth. There has been the odd TV18
which has gobbled up lots of smaller
firms, the odd newspaper deal from The
Times Group or Jagran Prakashan, the
sale of a few radio stations or channels
here and there, but that is about it.
And yet, if there is one industry where
M&As could really deliver value, it is
this. The $17-billion Indian media and
entertainment industry is very frag-
mented. It doesn’t matter which segment
you talk of — print, TV, films — almost
all are a nightmare to operate in.
Take films for instance. More than
90 per cent of India’s 11,000-odd screens
are single screens owned by individ-
acquisitions for a largish The reasons again are very Indian. Of
individual producers
who make a bulk of the
country’s annual aver-
language paper compa-
ny, says that they ad-
mitted defeat after a
the Rs 20,000 crore collected from
consumers in cash, just about Rs 2,000-
Rs 3,000 crore goes back to broad-
age of 1,000-odd films year. In print no one casters. Of the rest, a tiny percentage
and you have a fairly po- wants to sell because the will show up as revenues with cable
tent mix of organised newspaper a single companies. The remaining money
chaos and revenue leak- brand owner has, is her is completely lost. Why would anyone
ages. The world’s largest raison d’être. It is the on- who generates that much income in
film-making and -watch- ly tool of influence she cash want to sell out? This, by the way,
ing country made just
under $3 billion from
MEDIA SCOPE has, the reason she gets
any importance in her
is the same reason why outdoor me-
dia owners do not sell out.
1,300 films in 2008 com- VANITA city or state. Hanging on For these and myriad other reasons,
pared to about $40 bil- KOHLI-KHANDEKAR to ownership has noth- media and entertainment continues
lion for 550-odd films ing to do with making to remain a small, fragmented business.
from Hollywood in 2009. money. How can you argue with that? Globally, scale has come to this busi-
But you hardly see any consolida- Over the last few years, many in- ness by acquisition of brands in genres
tion happening. The two mergers an- vestment bankers have discovered that or geographies that are missing in the
nounced earlier this year (both on deals in media are hard to come by. And buyer’s portfolio. For instance, think of
the retail side) — PVR-DT Cinemas and most have a similar list of interesting what could happen if the Sun Network
INOX-Fame — did not materialise. reasons why deals don’t happen. In TV, merges with Sony or vice versa. In
Consider print, a hot industry right there are 30,000 cable operators carv- the absence of these opportunities, the
now going by the amount of mon- ing out 83 million cable homes among firms that want to make money are do-
ey pouring in and the valuations. All them. Till consolidation happens, this ing it the old-fashioned way — by launch-
the capital generated has led to on- business cannot be profitable for the ing new products and going into new
ly two major deals — Sun-Dinakaran large cable companies or for broad- markets, even if they are crowded. As
and Jagran-Mid-Day. This is an in- casters. However, consolidation is mov- they succeed, the pressure on exist-
dustry with about 60,000-odd regis- ing at a snail’s pace. The largest com- ing companies to sell will rise.
tered newspapers and about 1,000 panies can still boast of only two-three That is perhaps when we will see
serious companies. million subscribers. some serious M&A action.
One investment banker, who scout- Talk to any of the firms trying to
ed the length and breadth of India for acquire operators — it is an uphill task. Vanitakohli@hotmail.com