NEW DELHI: Purveyors of news are rarely objects of news themselves, but India's splintered media landscape has made news in the past two weeks. A flurry of deals or talk of more similar transactions have stirred up the sector in recent days, putting the spotlight on the possible motivations and some crystal ball gazing on what lies ahead.
Last week saw a little-known chemical and fertiliser company Oswal Green Tech buying a 14.17% shareholding in New Delhi Television (NDTV) through two block stock market deals. Media reports said Mukesh Ambani-controlled Reliance was looking at buying into Network18, which runs CNBC India. Before him, younger brother Anil's firm Reliance Capital increased its shareholding in UTV News, which runs Bloomberg TV, by buying out UTV founder Ronnie Screwvala's 66% stake.
Industry executives and experts believe the consolidation trend will pick up momentum in 2012, separating the men from the boys in this highly splintered sector that is being increasingly hobbled by cost pressures and revenue challenges in a slowing economy.
With more than 700 television channels in India and only few making money, experts believe consolidation in the industry is inevitable.
"Consolidation has to happen. It is required," says Haresh Chawla, who recently announced his resignation as group chief executive officer of Network18 and Viacom18 after leading the company for more than a decade.
One major problem for the industry is that it has been too dependent on advertising revenues, while subscription revenues have been elusive.
Analysts say some signs of consolidation are already visible, as media companies cobble together bouquets of channels.
"It is already starting to happen and going forward, media companies will look at building a portfolio of broadcast assets across genres, geographies and languages to create a national setup," says Jehil Thakkar, head of the media and entertainment practice at KPMG.
The move towards regional channels, spread across geographies and genres, is triggered by the high growth in advertising revenues in the segment. Growth in advertising revenues in big cities has been around 12-13% even in good times because of an inventory overhang, while regional advertising has been growing at more than 20% for the last few years, say analysts.
Last week saw a little-known chemical and fertiliser company Oswal Green Tech buying a 14.17% shareholding in New Delhi Television (NDTV) through two block stock market deals. Media reports said Mukesh Ambani-controlled Reliance was looking at buying into Network18, which runs CNBC India. Before him, younger brother Anil's firm Reliance Capital increased its shareholding in UTV News, which runs Bloomberg TV, by buying out UTV founder Ronnie Screwvala's 66% stake.
Industry executives and experts believe the consolidation trend will pick up momentum in 2012, separating the men from the boys in this highly splintered sector that is being increasingly hobbled by cost pressures and revenue challenges in a slowing economy.
With more than 700 television channels in India and only few making money, experts believe consolidation in the industry is inevitable.
"Consolidation has to happen. It is required," says Haresh Chawla, who recently announced his resignation as group chief executive officer of Network18 and Viacom18 after leading the company for more than a decade.
One major problem for the industry is that it has been too dependent on advertising revenues, while subscription revenues have been elusive.
Analysts say some signs of consolidation are already visible, as media companies cobble together bouquets of channels.
"It is already starting to happen and going forward, media companies will look at building a portfolio of broadcast assets across genres, geographies and languages to create a national setup," says Jehil Thakkar, head of the media and entertainment practice at KPMG.
The move towards regional channels, spread across geographies and genres, is triggered by the high growth in advertising revenues in the segment. Growth in advertising revenues in big cities has been around 12-13% even in good times because of an inventory overhang, while regional advertising has been growing at more than 20% for the last few years, say analysts.
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Analysts say this could explain why Network18 may be looking at Eenadu TV. "Network18 does not have any regional channels in its portfolio. This move will give them an entry into the fast growing regional market," says one analyst. Buying Eenadu TV could give Network18 a bouquet of 11 regional channels.
What may also be attracting new investors such as the Ambanis and foreign media companies such as Walt Disney is the promise of higher revenues and growth as the full benefits of digitalisation kicks in. Collateral benefits of media ownership include access to content sources to power non-media business and potentially even some influence.
In the case of Reliance Industries, which is setting up a national 4G broadband service, ownership of a media company will give it an edge over competition, with access to exclusive content from a bouquet of channels as well as web properties.
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