The Indian media and entertainment space is booming. There are lots of growth opportunities in print, TV, films, mobile, the Net, et al. And Indian media companies are diversifying into other areas successfully.
That is what the first few pages of most investor documents, strategy presentations or business plans in this space say.
It is not quite true.
Look at the table that goes with this column today. It lists, arguably, India’s top-10 media companies by their revenues. Each of them is ostensibly diversified into various other media. (Click here for table FACT SHEET)
But a closer look reveals that most of them still get a bulk of their revenues and profits from one media — sometimes from one brand. The Times Group, for example, is still largely about print and The Times of India. It has interests in TV, the Internet and radio, but together these bring in less than one-fifth of its revenues. The Zee Group is largely about television, either the broadcast or distribution of it. HT Media is still largely about the Hindustan Times and print and so on.
There is nothing wrong about this. Globally, most large media companies find it very difficult to have a go at another media successfully. Metro (a hugely successful free newspaper), Google, Facebook, YouTube, Twitter, all came out of the blue.
This is not about old or new media, youth or age, ability or the lack of it. It is about focus. The rule, it seems, is this — every media creates its own pioneers and leaders and more often than not they are unknowns.
In the early 90s, Subhash Chandra and Kalanithi Maran came out of nowhere to create two of the largest broadcasting companies in India — Zee and Sun — even while the opportunity was staring at every major publishing baron in the country. Rediff, Naukri and others have become the biggest companies on the Internet when big media was ignoring it.
However, it is this very success which becomes a limiting factor. Not only because it may inhibit risk-taking, but also because the heart, mind and soul of a company are coded in one media. Any senior manager at The Times Group will tell you that the heart of its owners is in the newspaper business. Zee may invest in a whole lot of things — radio, newspapers, the Internet — but its focus will be its TV business. So, the context from which many of these companies view growth is the context in which they were successful. Nothing then seems as exciting.
Imagine that you are Samir Jain, the vice chairman and chief strategist of The Times Group. When the top line from your flagship brand is more than the whole Internet advertising pie in India, why would it interest you? That makes it difficult to give money, time and resources to a business.
Eventually though, most companies do it, as international examples show. Even now, News Corporation is better known for tabloids such as the Sun and the News of the World. The fact is that its television business brings in 45 per cent of its revenues and the rest comes from films and publishing.
However, this kind of robust diversification happens when new minds come to the helm or the market conditions change dramatically — something we are seeing in the newspaper and television industries in India. In both these businesses even as the environment has changed dramatically — more competition, consumers migrating to other media, etc. — a whole new generation of owners/managers has taken over. They may well take the diversification game to the next level.
