Sometime in January, broadcasters and media buyers alike will sit down to get a fix on the money companies spent on buying slots on television, newspapers and magazines, radio and out-of-home media during the October-December quarter of 2011. Every set of numbers available so far has signaled a slowdown in economic activity. And advertising budgets are extremely susceptible to it: Every 1 per cent improvement in GDP growth raises spends by 3 to 4 per cent, but every 1 per cent decline brings the budgets down by 6 to 8 per cent. The quarter happens to be the one when companies spend the most because it is the festive season. It is also the quarter when companies decide their ad budgets for the next year – 2012 in this case. Experts agree that ad spends in 2012 will likely be below the 2011 mark of Rs 33,000 crore. But exactly how much is still being worked out.
That, in every possible way, will decide the fate of the television market in 2012, the largest source of entertainment in the country with 140 million cable & satellite homes and close to 650 channels. If it persists for long months, the results could be serious. In general entertainment, broadcasters are likely to pay less for programmes. This could mean less lavish sets for soap operas, modest reality shows and smaller artist fees. Experts reckon that it could leave a bigger impact on news channels because this has come at a time when there is a movement amongst channels towards self-imposed censorship in order to cut out frivolous reporting – Aishwarya Rai’s “first marriage” to a tree to ward off the evil eye et cetera. “There is a move to show real news, as against manufactured news,” says the editor of a news channel. So the whole exercise of getting eyeballs will surely get interesting.
The other factor likely to impact the sector is the recent amendment to the Cable Television Networks (regulation) Act of 1995 that seeks to totally digitize the cable network by December 2014. In the first phase, it is expected to be completed in Delhi, Mumbai, Chennai and Kolkata by June 2012. This will mean more subscription money, lesser carriage fees and better choices for the consumer, amongst other things. Industry estimates suggest that full digitization of the country may cost close to Rs 17,500 crore. In these days of tight money, this could, in turn, lead to some consolidation in the sector. PricewaterhouseCoopers Director (entertainment and media) Smita Jha believes that this will greatly alter the business model of broadcasters. Higher subscription revenue, she thinks, will reduce their dependence on advertising from 80 per cent now. This could see more private equity investments in the sector. She also thinks consolidation among broadcasters is round the corner. “We could see a lot of mergers and acquisitions in the first six months of 2012. The financial community is excited about it,” she says. Indeed, in the last few weeks several reports have suggested strong M&A undercurrents – Network 18 and Eenadu TV, for example.
Unlike television, the mood is upbeat in Bollywood, the next big entertainer. Producers, directors and distributors are enthused that films across genres did well in 2011 – Rockstar, Ra.One, The Dirty Picture, Delhi Belly, et cetera. So, success is no longer determined by a formula. So, producers and directors are expected to experiment with form and content in a big way. “The year also saw many myths being busted,” says film trade analyst Taran Adarsh. “No longer is it true that only films based on Mumbai (Delhi Belly) and with a male actor in the lead role (The Dirty Picture) will succeed. So, 2012 will be very good so far as acceptability of themes is concerned.”
What this also means is that the success probability of a film could be higher in 2012 than in 2011. This, in turn, will lead to more money being pumped into the industry. Most experts are convinced that films in 2012 will be bigger and grander, with more overseas expertise and high-quality special effects. Of course, no big-budget film can now afford not to release in 3-D theaters.
The film industry saw some sort of a slowdown during the financial meltdown of 2008, when, thanks to fears of salary cuts and joblessness, cinema-goers began to hold back. A cinema ticket, after all, is a discretionary non-essential expenditure. Will the current slowdown cause a similar cut in movie watching? Theoretically, it could. But analysts point to the recent success of The Dirty Picture and Mission Impossible Ghost Protocol to say that these films ran to packed houses in the midst of slack economic activity. “There is no impact whatsoever,” says Adarsh. “Mission Impossible collected Rs 18 to 19 crore in the first weekend. That’s awesome. I think 2012 will be a terrific year for the film industry.”
The year will also see the rapid spread of the private radio network in the country. The government is expected to auction about 800 new radio licences in 2012. This is more than thrice the 250 auctioned earlier. This will cause FM radio to spread to tier II, III and IV cities as well. Some people have expressed the apprehension that this will cause the radio ad pie (Rs 1,080 crore in 2010, according to PricewaterhouseCoopers) to be spread thinner among more claimants. While that might be true, it will definitely expand the pie. At the moment, very local brands and retailers in tier II and III cities do not advertise on radio. Once such cities have their own stations, there is a strong likelihood that they will begin to do so. Radio, in the last few years, has proved an effective medium to promote local events and brands. This is sure to gain momentum in the year ahead.
Whatever the gains or losses, the entertainment industry will surely not be short on excitement and possibly some entertainment also in 2012.