Media sector bullish despite dip in growth rate

The media and entertainment (M&E) industry in 2007 grew by an estimated 17 per cent over the previous year to touch Rs 51,300 crore, according to a recent Ficci-PwC 2008 report. However, this is 6 percentage points lower than the 23 per cent growth registered in 2006.

All the major segments within the M&E industry, comprising TV, film and print, will see a year-on-year fall in their growth rates going by the report estimates for 2007.

While the estimated growth rate of TV dipped by 3 per cent, film growth dropped by 10 per cent. The print media segment too registered a marginal drop of 1 per cent, while radio "� a fairly nascent segment in this industry "� saw a 32 per cent decline.

On the other hand, smaller segments like out-of-home and online advertising saw a 14 and 9 per cent increase in their growth rates respectively. However, their base is very small and this explains their high growth rates.

The advertisement figures of various segments in the M&E industry too shows a dip or flat growth rates. TV advertising remains flat at 21 per cent, radio advertising dropped by 32 per cent, while print saw a 3 per cent lower growth rate at 21 per cent.

The dip in growth rates, however, should be seen in the context of an increasing revenue base in this sector which has been growing at a tremendous pace, says Smitha Jha, senior manager, PwC India, adding, "The media sector has also registered the entry of new players and segments. For instance, two new channels have recently been introduced and there would be others as well. This has fragmented the audience as well as the advertisers."

Rajesh Jain, executive director and head of ICE, KPMG, corroborates this view. He says: "We do see the overall growth in the M&E industry to be in the range of 18 per cent. But the sector has the potential to grow faster. We feel that with new channels coming up, there is a potential to expand the operating market base to a newer audience."

On whether the advertisement pie is getting bifurcated due to new platforms, Jain notes that there has been no change in budget outlays.

"But yes, the marketing people will have to split across platforms. Moreover, we see prices in the vernacular medium growing. For instance, 22 per cent of the population has access to newspapers. We think that this will grow up to 47 per cent before coming down," he adds.

Analysts remain bullish over the future of this sector. Despite the dip in growth rates for this year, the industry recorded a cumulative growth of 19 per cent, according to the report. Globally, the migration to digital formats is accelerating and this trend is likely to emerge in India too.

Moreover, IRS 2007 data reveals that in the last four years, India's population has grown by 92 million individuals "� a growth of 12.5 per cent.

Of this, the media audience has increased by 86 million individuals "� a growth of 18.4 per cent. All these trends are expected to help the media and entertainment business become a Rs 116,000 crore industry by 2012.