Vanita Kohli-Khandekar Column: Our media holds no appeal for investors

India fares well when it comes to media consumption, but doesn’t manage to monetise the potential

In November this year, the government had announced an increase of Foreign Direct Investment (FDI) limits in media. This includes pushing to 100 per cent the foreign investment allowed in DTH, Cable, Hits, MSOs and 49 per cent in TV news. And there has been a rise in the ceiling for radio too, from 26 per cent to 49. None of this spread any cheer and there has been no deluge of investment into the sector. In fact, the earlier increased limits remain unused. That is not surprising.

Take films for instance. At 10 screens per million of population, there is no way its prolific film industry, with a world-beating 1,000 films a year, can ever hope to make money from even 100 of those films. There simply aren’t enough screens. Representation pic
Take films for instance. At 10 screens per million of population, there is no way its prolific film industry, with a world-beating 1,000 films a year, can ever hope to make money from even 100 of those films. There simply aren’t enough screens. Representation pic

Media and entertainment, on whole, is not a hot area globally. Except, perhaps, for Disney, Apple and Comcast, there haven’t been media companies that have brought great returns to shareholders. Much of this holds true for India too — except for 2-3 firms, media has not delivered returns for investors.

That is sad, considering the potential in this market — More than 800 million TV viewers, over 300 million newspaper readers and at 970 million mobile phones, one of the fastest growing digital media market. In fact, on all metrics, from video consumption to Internet penetration, India does well. Where it really collapses is on monetising this potential. Much smaller markets do much better than India on revenues and profitability. For instance, with 240 million viewers, Indonesia’s TV industry attracts over $6 billion in advertising. At 800 million viewers, the Indian one gets $2.5 billion in advertising. Please note that India’s economy is more than two times that of Indonesia. The reason for this inability to generate more revenues from a bigger, richer market are not hard to find.

For one, there aren’t enough avenues. Take films for instance. At 10 screens per million of population (the US is at 125), there is no way its prolific film industry, with a world-beating 1,000 films a year, can ever hope to make money from even 100 of those films. There simply aren’t enough screens. Incidentally, China was at the same screen count as India five years back, when it started investing in building screen infrastructure. It is now at 24 screens per million people, and guess what? It has become, in the process, the world’s second largest film market after the US. Not that it has a creatively robust or prolific market like India. So it is making more money from fewer films, simply because each gets enough screens.

The only time policymakers look at the film business in India is when a film is in trouble with the censors or with random protestors. Instead, a roadmap for the industry’s growth could help generate more jobs, taxes and wealth. And one thing such a roadmap can work towards is incentivising the building of multiplexes and digitising of theatres — by giving it infrastructure status perhaps.

That brings me to the second point, ad hoc regulation. While the last ministry — under the Congress — was obsessed with ratings, this one shows no interest in anything to do with media and entertainment. Our approach to regulation and policy-making is ad hoc and completely random. So, four years after the policy for auctioning radio stations in small-town and rural India was announced, it was in August this year that the auctions finally happened. In 2011, after being prodded by the industry, digitisation of TV was made mandatory. But except for a brief period of push, digitisation sort of languished. It will hopefully limp to closure some time soon. It is ironical that a process and technology that increases transparency, releases a couple of billion dollars in undeclared, untaxed revenues back in the system is not considered as important as banning a film or rapping a news channel.

Most discussions around media centre on content — its quality or lack of it — whether it is films, TV or news. But till many of the basic infrastructural issues around TV, films or radio are sorted and till these become industries that generate enough returns to invest in good content and technology, we will not see the change we want.

The writer is a media specialist and author. Follow her on twitter at http://twitter.com/vanitakohlik

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