FICCI-KPMG-Report-13-FRAMES

The power of a billion: Realizing the Indian dream
23
Investing in TV distribution – Why India is attractive
The size of India’s E&M opportunity was never in doubt.
The only factor that marred the attractiveness of this
opportunity was policy and its implementation. With
distribution primarily in analogue mode, the subscription
from the customers, of which only a small percentage
was accounted, did not find its way back to the
stakeholders who created the content and facilitated
its movement, including the government. Hence
this prevented the content creators from investing
in what they created, the platforms from upgrading
their delivery mechanism and the government from
rationalizing taxes.
DTH did set the ball of addressable system rolling,
however its expansion was stunted due to competition
with analogue cable whose cost structure was
completely different due to under-declaration. The fact
that with a third of pay TV industry’s subscribers, DTH
contributes more than cable to the broadcasters as well
as to the government is testimony to the differential
cost bases between the platform types.
Introduction of DAS (Digital Addressable System), in
phases is expected to change this scenario. Successful
implementation in Delhi and Mumbai has given the
government the confidence that implementation can
happen without the possibility of public unrest. It has
also given the vested interests, who were hitherto
working against its implementation, the clarity that
Digitisation is now only a matter of ‘when’ and not
‘whether’.
Implementation of addressable systems will make the
entire E&M ecosystem healthy with every component
sufficiently profitable and capable of investing to attract,
retain and extract more value from its subscribers.
Hence the low penetration levels will demonstrate
high levels of growth in the short run after adequate
infrastructural investments are made. In the long term,
with a large revenue base and reduced capex intensity,
the sector is likely to give fair returns to the investors.
However, some quick corrections are required to give
the potential investors some confidence to invest in the
cable businesses. Inter alia, these include:
• Infrastructure, processes and trained people to
manage customer interactions for creation and
updating of customised packages
• Field service infrastructure to manage installations
and repairs within acceptable time frame
• Ability to attract and retain experienced management
from relevant industries
• Build a brand of service and value
All of this is possible only if the businesses get to scale
and create contiguity versus the current sub scale and
fragmented state. I am sure everyone of the large cable
platforms are planning their moves to achieve all of the
above and more so that we move towards a profitable
Entertainment & Media ecosystem which attracts
adequate FDI. The laws have been created to support
the moves.
- Harit Nagpal
Managing Director & CEO,
Tata Sky
Broadcasting and Content
production
Introduction
The television advertising industry continued to be under
pressure due to the soft global and domestic economic
condition. This resulted in muted growth, particularly
in the first half of 2012. On an overall basis, the total TV
advertisement market is estimated to have grown around
8 18 percent in 2012, lower than industry expectations. In
comparison, growth in the TV advertisement market was
estimated to be 12 percent in 2011 and 17 percent in 2010.
“
“
Adsales growth has been soft in 2012. 2013
will see better growth, but will not be a
blockbuster year.
- Rohit Jain
Deputy CEO,
Videocon D2H
Unless otherwise noted, all information included in this column/ article
was provided by Harit Nagpal. The views and opinions expressed
herein are those of the authors and do not necessarily represent the
views and opinions of KPMG in India.
18. Industry discussions conducted by KPMG in India
“
2012 has been the toughest year in recent
times; in many ways, it was even worse
than when the subprime crisis hit in 2008.
At least then, the sentiment was still bullish
coming on the back of a few years of robust
growth. This time, the mood is a lot more
downbeat. Everyone is going into capital
conservation mode. Having said that, in
2008, the perception of things to come was
much worse than reality, and ad spends
were perhaps cut down a lot more than
was warranted.
“
- Uday Shankar
CEO,
Star India
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