Media Industry in India Where Does The Future Lie

October 2014

Index
I.

Executive Summary

II.

Industry Overview

III. Segment Analysis

IV. Increasing Mobile and Internet Penetration in India
V.

Growth Areas

VI. The Future of Print Media

VII. Conclusion
VIII. Investment Scenario

Executive Summary
For a long time, English
was the only worthwhile
game among dailies.
Now, as the markets
move
to
smaller
towns, publishers have
to adapt.

Media penetration in India has seen enormous progress in the recent years with
advancements in technology coverage and catering to a wide range of media audience in
terms of language, region and content

Moving forward digital

revolution will drive the
growth in the industry

The digital trend is likely to continue in the coming years as all the major sectors have
established a presence on the digital platform and digital technologies such as mobiles and
other smart devices will drive growth

The rapid surge in the internet and social media penetration has moved many readers from
print to online platforms. However, poor internet connectivity and difficulties in changing
well- ingrained habits are impediments for the digital medium to overtake the print media

Also an increasing number of people now prefer the digital experience for accessing news
and for entertainment purpose as it provides facilities such as on the move news, free
alerts etc.
Overall print media is driven by the factors such as rise in literacy rate , under-penetration in
regional markets , local advertising favoring local papers, and increase in regional
advertisement rates but it expected to grow at a far lower rate as compared to digital media
The year 2013 saw growth in the digitization of media products and services, as well as
development of regional media. With a base of ~400 Mn smart-phone users in the
country, the Indian Media & Entertainment Industry is set for a gradual but definite shift
towards the digital way of doing things

Industry Overview
- Overview
- Global Overview
- Understanding Indian Media and Entertainment Industry
- Global Benchmarking
- Porters Five Forces Analysis
- New Trends By established players

Media Industry in India

Overview
Size of major Industry Segments (2013)2

About The Industry

The Indian Media & Entertainment industry registered a growth of
around 12% and touched ~US$ 15.3 Bn in 20131

The
industry
comprises
various
segments
print, electronic, radio, internet and outdoor segments

such

as

The Government of India is aggressively pursuing the digitalization of

TV, and Multi System Cable Operators (MSOs) are expected to lose
15-20% of their subscribers to DTH (Direct to home ) services
The industry continues to grow and plays an important role in
bringing about awareness on many issues that impact the country
and the society in general

The industry is armed with digital technologies, state-of-the-art mobile

devices, not to mention backing from the countrys government

Growth Drivers

1%

2%

2%

4%

3%

Televison
Print

2%

Films
14%

45%

Radio
Music
Out of Home
Animation and VFX
Gaming

27%

Digital Advertising
Total Size - US$ 15.3 Bn

Major Players

- Consumer Need for Mobility

High aspirations of younger population, growing
acceptance of technology and growth of smart phones

- Sophistication of National Telecom

4G services expected to be introduced at rock bottom
price points by large conglomerates in the telecom sector

1
2

FICCI- KPMG, 2014, Report the stage is set

KPMG Report 2013, Aranca Research

Global Overview (1/2)

Global Advertising Spending Trend in M&E (in US$ Bn)
Category

2008

2009

2010

2011

2012

2013

2014E

2015E

2016E

2017E

Digital

$9

$11

$13

$15

$18

$21

$24

$28

$31

$35

Broadband

35

39

44

51

58

65

72

79

86

93

TV Advertising

26

24

27

28

30

31

34

35

39

41

In Home Video Entertainment

38

39

41

43

45

47

49

52

55

57

Audio Entertainment

17

16

16

16

16

17

17

18

18

19

Cinema

Out of Home

Consumer Magazines

13

12

12

12

11

11

11

11

11

11

Newspapers

30

27

27

27

27

27

27

27

27

27

Consumer and Education Books

18

18

18

18

18

18

18

18

18

18

10

10

10

11

12

13

14

15

205

205

217

231

244

259

276

293

312

330

Video Games

Total

Source : McKinsey & Company, Wilkofsky Gruen Associates, 2013

Global Overview (2/2)

Global Advertising Spending Trend in M&E (Numbers in % Growth Rate)
Category

2008

2009

2010

2011

2012 2007-12
CAGR

2013

2014E

2015E

2016E

2017E 20012-17E
CAGR

Digital

18.7

3.8

18.7

19.2

18.4

20.0%

17.3

15.6

14.7

13.4

12.7

14.7%

Broadband

17.4

11.5

13.3

16.2

13.5

13.6%

12.7

10.6

9.9

8.8

8.3

10.0%

TV Advertising

1.1

(7.5)

11.8

3.2

6.4

3.4%

3.6

9.4

4.1

9.4

5.1

6.3%

In Home Vedio Entertainment

4.8

3.4

4.3

5.2

4.8

4.4%

4.9

5.0

5.2

5.2

5.0

5.1%

Audio Entertainment

(3.3)

(5.2)

(1.4)

1.3

1.6

-1.0%

2.6

3.0

3.1

3.5

3.3

3.1%

Cinema

(3.1)

9.5

5.9

1.3

7.1

5.9%

2.3

4.3

4.8

5.0

5.1

4.3%

1.1

(13.3)

5.0

2.7

2.9

-1.0%

3.4

4.5

4.7

5.1

4.9

4.5%

Consumer Magazines

(1.7)

(10.9)

(0.1)

(0.8)

(2.3)

-3.6%

(1.9)

(1.0)

(0.3)

0.4

0.9

-0.4%

Newspapers

(4.2)

(10.6)

0.7

(0.5)

(1.5)

-3.1%

(1.0)

(0.2)

0.4

0.9

1.2

0.3%

0.6

(1.1)

1.0

0.1

(1.4)

-0.4%

0.1

0.3

(0.3)

(0.9)

(1.3)

-0.4%

21.5

2.3

4.5

4.9

7.1

3.8%

5.7

8.2

8.2

7.7

6.6

7.3%

Out of Home

Consumer and Education

Books
Video Games

Digital and Broadband remain high growth areas around the world
Source : McKinsey & Company, Wilkofsky Gruen Associates, 2013

Understanding Indian Media and Entertainment Industry

Market Size (In US$ Mn)
Sub Segments
of M&E

TV

2008

2009

2010

2011

$4,017 $4,283 $4,950

$5,483

2012

2013

$6,168 $6,950

5 Year
CAGR

12%

2014P

2015P

2016P

2017P

5 CAGR
2018P from 20132018P

$7,982 $9,457 $11,207 $12,865 $14,750

16%

Print

2867

2875

3215

3480

3735

4051

7%

4400

4783

5217

5717

6233

9%

Films

1740

1488

1388

1548

1873

2088

4%

2300

2638

3022

3333

3663

12%

Radio

140

138

167

192

212

243

12%

277

317

383

463

560

18%

Music

123

130

143

150

177

160

5%

168

188

220

252

297

13%

Out of Home

268

228

275

297

303

321

4%

353

535

420

458

500

9%

Animation and
VFX

292

335

393

517

588

661

18%

750

862

1000

1052

1382

16%

Gaming

117

133

167

217

255

320

22%

392

467

538

602

677

16%

Digital
Advertising

100

133

167

257

362

502

38%

687

918

1162

1468

1703

28%

Digital remains a growth area in India and as print media continues to slip
in terms of growth and readability, digital will take a huge chunk of that pie
Source :FICCI KPMG , 2014, Report The Stage is Set

Global Benchmarking
India vs. Rest of the World
Growth in Media and Entertainment (%)
16%
14%
12%
10%
8%
6%
4%
2%
0%

M&E Spend as % of GDP

15%
13%

12%
10%

3%
1.50%

India

China

Russia

Brazil

US

1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%

UK

1.50%
1%

0.50%

UK

Global Reach of News (%)

61%

Brazil

Russia

China

0.41%

India

60%
52%

56.80%

46%

44%

38%

31%
16%

70.90%

Brazil
0.00%

61%

61.10%

Russia

Japan

0.40%

86%

76.10%

India

US

0.40%

Global Internet Penetration (%)

Worldwide
China

1%

88.40%
20.00%

40.00%

60.00%

80.00%

100.00%

Source : FICCI KPMG, Report 2014

Porters Five Forces Analysis on Media Industry in India

Bargaining Powers of Buyers

Bargaining Powers of Suppliers

Very high for both print and electronic

media

In the print media the bargaining power of

suppliers is high for newsprint. It is medium to
low for content provides in the electronic
media

The consumer finds a wide range of

options to choose from

Conditional access system (CAS) and DTH

services enable the consumer to choose
the channels that he wishes to view,
thereby increasing consumer power

Presence of significant amount of players in the

market increases buying power of customers

Threats of New Entrants

Threat of Substitutes
There is no substitute of media
information
They could switch to modes of reading
information such as switching from TV to
mobile devices

The bargaining power of suppliers is moderate for

overall media industry

Industry Competitors

In electronic media, entry barriers are high

for broadcasting since it is capital
intensive

The competition in print media, especially

in Hindi dailies is significantly high

The barriers to entry are far low for content

providers. Despite of the high barriers to
entry a slew of channels across languages
and genres have been launched in the
recent past

Threat for substitutes is low for the media

industry

The threat of new entrants in the markets remain

moderate

Overall: Moderate to High

Regional print media

increasing competition

is

also

seeing

Competition is high amongst broadcasters

especially for general entertainment
channels

The competition in media industry is relatively high

due to presence of large number of players

10

New Trends by Established Players

Increasing Online Readership

The publishers are using City-wise localized content page for

targeted viewing
It offers multimedia content by syndicating video feeds from its
sister concern, TimesNow, a 24 hour news channel
The publishers are coming up with new ideas to combine news and
advertising as a new business model

Digital newsroom format with a mix of

quick post, user interaction, discussion
and debate
Co-creation of news model; users and
readers are asked questions and
encouraged to debate on the various
topics

Established players are facing strong competition from regional

newspapers and advertising sources

11

Segment Analysis
- Print Segment
- Television Segment
- Radio Segment
- Digital Advertising
- Performance in Digital Space
-Rise of Digital Advertising

12

Print Segment (1/2)

Overview
About The Industry

Sub-Segment of Print Industry (2013)

The Indian Print Industry grew from US$ 3.73 Bn to US$ 4.05 Bn in
2013, representing a 8% growth

Indian Print Industry

US$ 4051 Mn

The Print Industry mainly consists of revenues streams such as

Newspaper Advertising, Newspaper circulation, Magazine Advertising
and Magazine circulation
Newspaper accounts for ~93% of the total print industry revenues
and consumer magazines account for the remaining
The industry is expected to grow at a CAGR of 9% from US$ 4.05 Bn
in 2013 to US$ 6.23 Bn in 2018

Newspaper
Advertising
US$ 2471 Mn
61%

Revenue Mix of Print Industry

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Magazine
Publishing
US$ 284 Mn
7%

Major Players
Top 3 English

37%

35%

33%

33%

33%

32%

63%

65%

67%

67%

67%

68%

2009

2010

2011

2012

2013

2014

Circulation

Circulation Revenue
US$ 1297 Mn
32%

Top 3 Hindi

Advertisement

Source : FICCI KPMG, Report 2014

13

Print Segment (2/2)

Overview
Average Daily Newspaper Circulation (July Dec 13, Millions)
53

Others
38%

Hindi
35%

20

19
9

Hindi

English

Marathi English
10%
17%

Marathi

Others

Total Certified Circulation - 53 Mn

Total

Top 5 Daily Newspapers by circulation in India (July Dec 13, Millions)

3.32

The Times of India

3.25

Dainik Bhaskar

3.11

Dainik Jagran

2.24

2.23

Hindustan

Malayala Manorama

Source : Audit Bureau of Circulations

14

Television Segment
Overview
About The Industry

Sub-Segment of Television Industry (2013)

Television is one of the major mass media sources of India and is a

huge industry and has thousands of programs in all the states of
India. India boasts of being the 3rd largest television market in the
world

Indian Television Industry

US$ 6950 Mn

The Indian Television Industry mainly consists of Advertising and

subscription revenues

Subscription
Revenues
US$ 4656 Mn
67%

The Indian Television Industry grew from US$ 6.16 Bn in 2012 to US

$6.95 Bn in 2013 registering a growth of 12%
Digitization has proven to be a boon for the Indian Television
distribution industry but Industry players are yet to realize the full
potential of the exercise

Penetration of Television Sets in India (In Mn)

250

95%
191

200

161

154
150
100

86%
84%

50
0
2012

2012

Advertising
Revenues
US$ 2294 Mn
33%

Television Media Market Size (US$ in Mn)

96%
94%
92%
90%
88%
86%
84%
82%
80%
78%

2018P

$8,000
$6,950

$7,000

$6,168
$5,483

$6,000
$5,000

$4,950
$4,017

$4,283

$4,000
$3,000

$2,000
$1,000
$0

No. of TV Households

C&S Penetration of TV Households

2008

2009

2010

2011

2012

2013

Source : FICCI KPMG, Report 2014

15

Radio Segment
Overview
About The Industry

Historical Growth (In USD Million)

The year 2013 was good for the radio industry, wherein it grew by
15% from ~US $210 Mn in 2012 to ~US $240 Mn in 2013

$300

Growth in the industry is mainly driven by increased popularity of

the medium and smaller towns & cities

$200

State assembly elections held in 2014 also contributed to the growth

of industry
Over 90% of Indias population has access to Radio

$243

$250

$150

$192

$212

$167
$140

$138

2008

2009

$100
$50

The growth in Indian Radio Industry is expected to be driven by

launch of new stations, increased acceptance in tier I and Tier II
cities and growth in advertising ER on radio

$0
2010

2011

2012

2013

Increase in listenership in Broadcast as well as internet radio

300

Broadcast Radio

Internet Radio

18 Million new
listeners, 8%
increase

250
200
150

97 Million new
listeners, 421%
increase

100
50
0
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Source : FICCI KPMG, Report 2014

16

Digital Advertising
Overview
About The Industry

Mobile and Internet Penetration

Revenue from digital advertising grew from US $362 Mn to US $502

Mn in 2013, representing a growth of 39% driven by growth in mobile
internet access in India
The increase in mobile phone connections, availability of cost
effective smart phones and feature phones, technology upgrades by
mobile operators, and tech savvy young generation have driven the
growth in mobile internet connections
Digital advertising market is believed to be at the cusp of sustained
rapid growth
But the biggest challenge in the digital space still remains the
monetization of the digital customers

Projected Size of Internet Penetration

1000
900
800
700
600
500
400
300
200
100
0

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

86%
72%

79%

74%
61%

61%

79%
60%

16%
2%
Japan
Australia
Mobile Internet Penetration %

UK
USA
India
Wired Internet Penetration %

Growth Drivers
Investment by telecom operators to expand which will improve 3G
infrastructure to tier 2 cities and rural India

In Mn

Affordable prices of 3G data services

463
268
174
24
150

2013

331

392
41

36

213
27

31
295

351

186

237

2014P

2015P

2016P

2017P

Total

Wireline Connections

Indias growing internet population

47

Affordable smart phones and tablets

416

Growth of social media, gaming, Video on Demand and the need for
youth to stay connected by sharing pictures and videos

2018P

Source : FICCI KPMG, Report 2014

17

Performance in Digital Space

By local and international publishers
Time of India (TOI) leads online news
ranking, while HT Media generates the third
largest traffic
Unique online visitors (Mns), August 2013
14
12

TOI has consolidated its online

presence by offering multimedia
content; syndicated video feeds
from its sister
concern, TimesNow, a 24 hour
news channel

13

India today, a weekly news

magazine, draws content from
Headlines
Today, a news
bulletin. Its Hindi edition borrows
content from Aaj Tak

11

10
8

7.5

6
6

4
4

Network 18 launched
FirstPost.com, a news and views
website in 2011

2
0
The Hindu

Economic Times

OneIndia.com

NDTV

Jagran Sites

India Today

HT Media

Yahoo News

TOI

WSJs has India Real Time Blog

for India specific news and
opinions
NY Times introduced India
link, its first ever attempt at a
country specific site

Source : Bain Research, India Daily Readership of online news, Lit search

18

Rise of Digital Advertising

How Google redefined the advertising landscape
Googles Annual Advertising Revenue Vs All US Newspapers Advertising Revenue

Over the last 10 years

Google
alone
has
surpassed
the
total
advertising revenue of
all
US
Newspapers
combined
There
is
a
high
possibility that this trend
could be replicated in
the India in the near
future

19

Increasing Mobile and Internet Penetration in India

-Potential of Mobile and Wired Internet in India
- Demographic Dividend
- Tables vs. Smart phones

20

Potential of Mobile and Wired Internet in India (1/3)

Scope

~16%
Mobile Internet
penetration in India
(> 30 Mn)1

Mobile
Internet

~30%
Mobile Internet
penetration in India
(> 543 Mn)2

2014

2018

~2%
Wired Internet
penetration in India
(> 18.50 Mn)3

~30%
Wired (BB) Internet
penetration in India
(> 600 Mn)4

Wired
Internet

2014
Source: 1Nokia Solutions and Networks (NSN), 2CII-PwC India Report, 3TRAI Report,

2020
4

National Telecom Policy, BB: Broadband

21

Potential of Mobile and Wired Internet in India (2/3)

Mobile Internet
Indias 3G users more than DOUBLED last year, beating the global average
Current internet penetration:
Mobile internet penetration:

~15%

< 16%

The data traffic increased by an astounding

Number of Smartphones in India:

83% last year itself

394 Mn (~30% Penetration)

India is grossly underpenetrated in

terms of the internet as well as smartphones. The expected growth for
The above statistics make it clear that

both is exponentially high, which leaves tremendous space for the digital marketers to
come in and sell. Indians spend more time on the internet and smartphones
than the rest of the world, we spend about 2-3 hours a day on our smartphones
which opens up myriad opportunities for the digital media companies to leverage
Source: 1Nokia Solutions and Networks (NSN)

22

Potential of Mobile and Wired Internet in India (3/3)

Wired Internet
The Government will provide 'broadband on demand' by 2015 and achieve a target
of 175 Mn broadband users by 2017 and 600 Mn by 2020
Current PCs in India:

< 30 Mn (2.30% Penetration)

Wired internet penetration:

Rural Teledensity:

< 2%

30%

Wired being Weird,

Despite
wired internet will still be a darling for digital
marketers. In spite of the tremendous potential of internet advertising and media in
India, there are still barriers such as low literacy and inadequate local language
content. Mobile-specific ad formats are still in their infancy, and the small screens of
smart phones allow selected content. The only challenge here is low penetration (for
both wired internet as well as PCs) and the absence of a comprehensive wired
infrastructure that gives last-mile connectivity for a fully networked country, if these two
things are handled well, wired and mobile internet will go hand in hand for digital media in
years to come
Source: TRAI

23

Advantage of Demographic Dividend

Age Structure of Indian Population

65 Years and
Above, 5.60%

Internet Penetration %

0-14
Years, 28.90
%

55-64
Years, 6.90%

25-54
Years, 40.40
%

15-24
Years, 18.20
%
Total Population ~1.25 Bn

India has about 20% (2014) of its population under 24 years of age, which
will convert into the largest chunk of the pie, i.e. >40% of the population
that is under 54 years of age and going forward, the same percentage will
change to >50%. Younger population is able to readily adapt to digital
applications than older population who still depend on Print Media News
Source : US Consensus Bureau

24

Tablets vs. Smart phones

Portable vs. Pocketable

Only a matter of portable vs. pocketable

Both the devices have almost the same utility. As far as using them for digital media is
concerned, it depends, on the content (need of a bigger screen) as well as the
reader, if one has a more on the go need, then smartphone is the option and if
someone needs a sit back and use feel, then tablet is the device
Source: Forrester Research

25

Growth Areas
- Indias Statistics
- Hot Areas
- Current Focus Area
- How to Analyze
- Digital Revolution
-Government Initiatives
-Key Risks of Digital Media
-Major Challenges Faced by Digital Media

26

Indias Statistics
Few facts

~15%
Internet penetration
in India

>1.3 Bn
people

>900 Mn
mobile accounts

>30 Mn
PCs

>200 Mn
internet users

~2 hours
an average Indian spends on
the internet a day

27

Hot Areas
Segment wise: Mobile and Apps

With just about 15 Mn people using mobile web, India

stands grossly underpenetrated and heres how
the 15 Mn people spend their time

With 1,376,281
(1.38 Mn)
apps in India and people
spending 86% of their mobile
web time on the same, theres
clearly a way to increase the
internet penetration and
furthermore increase the impact
of digital media through these
apps and smartphones

28

Current Focus Area

Segment wise: Smart TVs

With the integration of internet, apps and

Smart TVs
are the future.

web browsers,

Normal Television
(+)
Internet

People spend about 3-4 hours a day on

television which is almost equal to what
they spend on their smartphones, so smart
TVs will become a great means of digital
media in years to come.

(+)
Apps
(+)
Web Browsers
=
Smart TV

29

How to Analyze
Use of Big Data Analytics

BIG DATA: Analyzing the data that will tell the media
marketers about what to sell, when to sell and to whom to
sell

Only 0.50%

While 36%

of all the digital data that is

generated in India is analyzed

of the total data generated can

provide valuable insights

The world generates enormous

data. One Petabyte (i.e.1024
terabytes) of data is generated

or the
equivalent of 13
years of high
definition video.
every 11 seconds,

2020

2014

17%
Contributed
by
India
&
China

Global Digital
Universe is
41.4
Zettabyte
(ZB)
India
2.90
ZB

29%

Using this data for digital

media, one can feed the target
audience with exactly what they
need at the right time

30

Digital Revolution
Kindle Story Creating library in your device
Digital Revolution
Transformation in
reading books

- The economics of digital books has changed the contentions of reading and writing as well. As
kindle allows readers to download the first chapter free of charge. The "free sample" component of
a book will become as conventional as jacket-flap copy and blurbs
- No one likes to carry around paperback books as they are expensive and one cannot carry many
of them at the same time, but as the kindle app and devices have been introduced to readers, they
can carry as many books as they want in digital format and could read anywhere
This digital revolution will take the whole print and media industry by storm, so adapting to
the change can be the key to staying power in the industry

31

Government Initiatives
The Mass Objective of Digitalizing India
A Pan India program Digital India with an outlay of Rs. 500 Crores has been introduced in the 2014 budget- this
includes the work on a project to introduce government services on mobile phones along with expansion of IT
Infrastructure

A sum of Rs. 100 Crores has been allocated in the budget for 600 new and
existing Community Radio Stations
A sum of Rs. 100 Crores has been provided for kisan TV, to disseminate real
time information to the farmers on issues such as new farming
techniques, water conversation, organic farming etc.

The Government has also taken steps to strengthen at least five institutions
as technical Research Centers
The 5 Ts of the Government in power includes Technology as one of its
major component

32

Key Risks of Digital Media

Environmental & Health hazards
No longer should brands be touting go digital, go green and
the like without any type of investigation behind what indeed is
the environmental impact of such claims
The average mail spam causes emissions equivalent to 0.3
grams of carbon dioxide per message and in 2008, there
were 62 trillion such messages. Taken together, all these
email messages caused the carbon dioxide equivalent of
driving a car around the Earth 1.6 million times

An estimated 50 million tons of E-waste is produced

annually worldwide
Source : The Millions, Are e-readers really green, May 2012

33

Major Challenges faced by Digital Media

Overview
Information technology (IT) transforms the way that many businesses operate and presents tremendous opportunities
to increase revenues, cut costs and create new customer value. However, alongside these opportunities, there are
growing concerns about the control and security of digital information which a business needs to manage in order to
capture and retain value from IT. These concerns are fuelled by:
High-profile data breaches and the growth of cyber attacks
Individual experience of identity theft, phishing emails, spam and computer viruses;
Controversial use of personal information by governments and businesses; and
Repeated failures to secure intellectual property and prevent others from exploiting it
Big Data

Big data is a moniker for the explosion in data that has

occurred as a result of dramatic increases in computing
power coupled with sharp drops in the cost of both
computing and data storage.
Here are just a few astounding statistics regarding the
growth of big data:
30+ billion pieces of data are added to Facebook every
month
72 hours of video are added to YouTube every minute
92% of the worlds data was created in just the past two
years
Analyzing all this data in order to gain key business insights
has become very important for today's digital business
34

The Future of Print Media

- Future of Print Media
-Growth in the Vernacular
-Challenges of Print Media in India
-Situation Update - Print Media Publishing
-Top Priorities for Print Publishers
-Approaching the Digital Transition with Innovative Ways
-Case Study : The Washington Post

35

Future of Print Media

Print Media Market(US$ in Bn)
Total Advertising
Total Circulation
Total Print Market

2011 2012 2013 2014 2015P 2016P 2017P

$2.32 $2.50 $2.72 $2.98 $3.32 $3.70 $4.13
1.15 1.23 1.35 1.42
1.47
1.53 1.58
3.47 3.73 4.07 4.40
4.78
5.23 5.72

CAGR
2018P (2014-18)
$4.58
11%
1.67
4%
6.25
9%

Total Newspaper Revenue

Total Magazine Revenue
Total Print Market

3.27 3.52
0.20 0.22
3.47 3.73

6.02
0.23
6.25

3.83
0.22
4.05

4.17
0.22
4.38

4.55
0.23
4.78

5.00
0.23
5.23

5.48
0.23
5.72

10%
2%
9%

Print Industry is expected to grow at a CAGR of 9% over 2013-18 while

Digital media is expected to grow at a CAGR of 28%
The readership is now inclining towards on the move news, free news, 24
*7 access, alerts etc and Average minutes online news readership has
increased by ~32% over the last year
Online News
Readership

August-12

August-13

% Change

Total Unique
Visitors (in Mn)

40.00

45.00

15%

Total Visits (in

Mn)

2,59

3,64

40%

Average Daily
Visitors (in Mn)

7.00

9.00

34%

Average Minutes
per visitor

31.6

41.6

31%

Indian Print Industry

grew from US$ 3.48 Bn
in 2012 to US$ 4Bn in
2014, representing a
growth rate of ~8.5%
over 2 years

Globally, Newspaper
advertising revenue
dropped by ~40% over
the last 6 years

Is print Media Dying?

-The print media will not die in a short span of time
but going forward more customers will shift to
digital media because it is cost effective and
convenient (Gen Y Revolution Always on the go)
- Still this shift will take around next 10-20 years
when all customers will only rely on digital media
to consume information

Source : FICCI KPMG, Report 2014

36

Growth in The Vernacular

As per a study done by Mindshift Metrics, after
English, Hindi is the most preferred language for
accessing internet in India followed by
Tamil, Marathi, Gujarati, Telugu and Bengali

Local languages are the single largest driver of

internet growth in the rural areas
With Internet penetration on the rise, the people
beyond urban cities accessing internet are
demanding content in their own language

43% of the non-users of the Internet are

willing to adapt the medium if the content in
provided in local language

37% of the Internet users in urban India use

the internet in local language

56% of the Internet users in rural India use

local language

Influenced by all the above trends, many brands

from all sectors are now indulging in more and
more local language content on the digital
Dearth of local language content and a distinct
gap in quality and usability in Hindi and other
language websites results in a disjointed user
experience

There is a need for relevant and quality local language online content, translation
and user interface technology, as well as mobile services to further grow the
vernacular services industry
Source : IAMAI
37

Challenges of Print Media in India

Digital Media fast eating into print media ad-spend
Emergence of digital would materially harm the print industry in
the medium to long term and the English print medium is at a
higher risk compared with regional print

Rise in paper prices, shrink in profits

The newspaper printers do not have any control over the price
rise of papers in the country which shrinks the profit of print
media players

Availability of cost effective sources of consuming

information
Technology up gradation and rising internet penetration has
made the availability of news information on cost effective
platforms, which is attracting regular newspaper customer
towards it

38

Situation Update - Print Media Publishing

Print Media : What Was
- Publishers in India
Limited in Number
Virtually Monopolistic
- Print consist of newspapers and
magazines
- Newspapers and magazines were
usually circulated by delivery and sales
at local kiosks
- High cost structure had restricted other
players to enter the industry. The high
cost of printing and circulation makes it a
high cost business model/organization

Print Media : Now

- Traditional newspapers are concerned
with losing customers, losing advertising
revenue etc
- Yet, industry has raised the prices of the
newspapers but delivery for newspapers
is limited to fewer eyeballs and ears
- The alternative media platforms such as
online, mobile etc have gain more
traction among the customers to due to
low cost of accessing information and
the rise of internet penetration in the
country
- These platforms are making industry low
barrier to enter in the industry

39

Top Priorities for Print Publishers

Making the Transition
Top priorities for publishers in the next couple of years would be reallocation of resources from
traditional to digital media by optimizing costs and improving ad sales performance, and using
these reallocated resources to built capabilities in the digital content and ad sales

Reallocation of
Resources
From
Traditional to
Digital Media

Print publishers currently have substantial room for cost optimization.

Although they must prepare for the transition to digital by making immediate
structural changes to ensure that their organizations are lean and ready that
will be better able to absorb the coming loss of print revenue
Newspapers can also cut down on the overstaffing that results from models in
which reporters are stationed in key news centers or assigned to narrow
topics. Instead, they can consider freelance or contracting models, as well as
judicious use of news agencies

Some web-only publications offer dramatic models for reducing the cost of generating content :Uses paid external contributors rather than in-house staff for much of its
content, turning fixed costs into variable costs
Relies primarily on outside contributors looking to drive traffic back to their
own blogs or websites
Has begun to acquire local sites with high traffic and reverse publish their
blogger in the daily newspaper. This model reduces the cost of
content, even as it enhances audience engagement

40

Approaching the Digital Transition with Innovative Ways

Differentiation

Whose Done It ?

Parallel Play

Whose Done It ?

Bundled Play

Publishers can offer their commodity content free on traditional websites

and smart-phone apps, while encouraging users to pay for value added
content on tablets, on e-readers, and in print.
Time Magazine in some cases even charges more for the
e-reader version than they do for the print magazine

The growing number of ways available to access consumer media will lead
to a strategy in which publishers will offer brand subscriptions, allowing
subscribers to access the same content through a variety of channels.
Here, the goal is to serve traditional readers as they move to
digital, and simultaneously attract new readers
Offers a paid iPhone application that essentially replicates
all the content available in print with a few additional
features

The goal of bundled play strategy is to encourage current customers to

increase their spending by offering higher priced packaged combinations of
value added content and services, on a variety of platforms.

Whose Done It ?

41

Case Study : The Washington Post

Background in 2012
Brief History
Washington Post is the most widely circulated newspaper published
in Washington, D.C., since 1877
The newspaper was purchased in a bankruptcy auction in 1933 by
the former Chairman of the Federal Reserve's board of
governors, Mr. Eugene Meyer, who restored the newspaper's health
and reputation and later it was again sold in 2012
It experienced an operating loss of nearly US$ 22.6 Mn in 2012 due
to a fall in print advertising
Then in 2012, Mr. Jeff Bezos the founder and CEO of Amazon
purchased The Washington Post for US$ 250 Mn

Investment Rationale
Amazons purchase of The Washington Post represents the next
logical step in owned media, the purchase of a major media outlet
by a major marketer in order to sell directly to the public
Amazon is already in the content production and distribution
business and news will add more content to it
"News" is the digital equivalent of a high-traffic intersection: As
people pass through to consume information they might also stop to
do some shopping.

I understand the critical role the

Post plays in Washington, DC, and
our nation, and the Post's values will
not change. Our duty to readers will
continue to be the heart of the
Post, and I am very optimistic
about the future Jeff Bezos

42

Case Study : The Washington Post

Turnaround Strategy
Mr. Jeff Bezos, after buying newspaper analyzed that in print media the newspaper is not doing well due to a shift in
consumer habits toward consumption of information through digital platform
He used the opportunity and promoted the newspaper on the digital platform by way of online subscription and mobile
applications which were helpful to attract the online customers back to The Washington Post and after that the viewership
increased substantially

The newspaper outperformed major competitors in the US

As per August 2013 : the viewers are:

No. of Viewers
Just Under 40 million

22.9 million

27.3 million

43

Conclusion
Although the
inflection point at
which print begins
giving way to digital
has not yet arrived in
the India, it is clearly
coming.

In the near future, print newspaper in India will reach an inflection point at which they will
begin to lose significant share to digital media
Print newspaper publishers now stand on the edge of a major shift that will transform their
businesses the evolution from print media to digital
For a glimpse of the future, publishers need only look at the experience of print focused
media companies in more developed Western markets such as the US and Europe
Although the inflection point at which print begins giving way to digital has not yet arrived in
the India, it is clearly coming, and maintaining the status quo is no longer a sustainable
strategy
Even as the global economic situation begins to stabilize and improve, traditional media
players cannot expect a return to historical growth rates. In short, they must prepare for the
inevitable or risk losing share of their existing revenues
For newspaper publishers, the message is clear: They will lose some share during the shift
from print to digital, but they can recoup that share by moving to the digital platform along
with readers and marketers, and thus seek to maintain overall profitability at the enterprise
level
Over the next couple of years, we recommend that publishers undertake a series of
preparatory measures to revamp their organizational structure, freeing up cash and other
resources that can be reallocated to digital initiatives, and thus better aligning their
capabilities with the needs of the present market

44

Investment Scenario in Media and Entertainment Industry

- M&A and Private Equity Investment
- Common Stock Comparison

45

M&A and Private Equity Investment

Mergers and Acquisitions in the Industry
$1,200

45

$1,000
37

$800

28

$600

23

21

22

$400
$200
$0

$549.81

$256.35

$574.81

$874.38

$74.22

$1,031.95

2009

2010

2011

2012

2013

2014 YTD

Deal value (In Million $)

50
45
40
35
30
25
20
15
10
5
0

Deals

Private Equity Investment in the industry

$700

30

26

$600
$500
$400

25

23
15

$300

20

20

19

13

10

$200
$100

$0

15

5
$238.02

$98.70

$619.37

$296.98

$538.56

$94.97

2009

2010

2011

2012

2013

2014 YTD

Deal value (In Million $)

Deals

Source : VCCedge

46

Common Stock Comparison

(Rs. in Crores, except per share amounts)
SNo.

Company Name Market Cap Net Debt

HT Media

T V today network

1,294.37

-57.26

Jagran Prakashan

3,986.55

Hindustan Media

DB Corp

SNo. Company Name

Sales

EV

2013

Rs. 2,619.58 Rs. 351.59 Rs. 2,971.17

EBITDA
2014

2013

Net Income

2014

2013

2014

Rs. 2,048.38

Rs. 2,200.70

470.2263

Rs. 637.11

Rs. 167.65

Rs. 207.53

1,237.11

312.67

389.44

31.23

105.67

12.21

61.32

408.55

4,395.10

1,521.79

1,702.73

254.99

331.91

255.08

226.15

1,203.66

-5.66

1,198.00

636.27

729.72

112.55

151.23

84.52

111.21

6,165.11

41.15

6,206.27

1,592.32

1,859.76

1,192.50

1,335.61

218.14

306.65

EBITDA Margin (%)

2013

2014

PAT Margin (%)

2013

2014

HT Media

23%

29%

8.18%

9.43%

T V today network

10%

27%

3.91%

Jagran Prakashan

17%

19%

Hindustan Media

18%

DB Corp

EV/Sales
2013

2014

EV/EBITDA
2013

4.66x

2013
15.62x

2014

1.45x

1.35x

15.75%

3.96

3.18

39.61

11.71

105.98

21.11

16.76%

13.28%

2.89

2.58

17.24

13.24

15.63

17.63

21%

13.28%

15.24%

1.88

1.64

10.64

7.92

14.24

10.82

75%

72%

13.70%

16.49%

3.90

3.34

5.20

4.65

28.26

20.11

Average

28.46%

33.62%

11.17%

14.04%

2.82x

2.42x

15.80x

8.44x

35.95x

16.46x

Maximum

74.89%

71.82%

16.76%

16.49%

3.96

3.34

39.61

13.24

105.98

21.11

Minimum

9.99%

19.49%

3.91%

9.43%

1.45

1.35

5.20

4.65

14.24

10.82

17.69%

27.13%

13.28%

15.24%

2.89

2.58

10.64

7.92

15.63

17.63

Median

6.32x

2014

P/E

12.62x

47