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Tuesday, May 24, 2005

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Broadcasting cos bet on expansion to get more leveraging power

Nithya Subramanian

New Delhi , May 23

THE Indian broadcasting industry has started betting on size. Companies are looking at various growth opportunities such as building their networks by adding more domestic and overseas channels, beefing up distribution arrangements and diversifying into films.

Only recently, SitiCable bought RPG Netcom, a cable distribution company in Kolkata, Sony Entertainment Television acquired SAB TV, NDTV Ltd and Television Eighteen have announced plans for launching more channels while Balaji Telefilms and UTV are bullish on the film business.

Mr Ashish Kaul, Vice-President, Corporate Brand Development, Essel Group, said "Diversification and integration has to happen. It is a greater risk if companies do not do so. Hence, corporates such as Zee Telefilms have a large bouquet of channels across all genres, presence in distribution and interest in the movies business."

Making a case for large set-ups, Mr Sameer Manchanda, Joint Managing Director, Broadcast News Ltd, added, "Also taking a network approach in the case of channels gives more leveraging power, especially with advertisers and distributors."

However, industry representatives felt that these are just the tentative first steps and more needs to be done. Speaking to Business Line, Mr Ronnie Screwvala, Chief Executive Officer, UTV Software Communications Ltd, said, "There is not enough integration happening as size and scale in the media business do matter. The volatility in this business is very high and there is a need to balance out the risks. If a company chooses to be a niche or a speciality player, it will have to be at the pinnacle of that segment to succeed." Hence, the UTV Group owns a television channel, has interests in television software production and films.

A JP Morgan report on the media industry said, "Overall, we expect three-four integrated media companies to emerge as big players. However, there will be sufficient growth prospects for companies in niches as well. In our view, companies of both scales will co-exist."

However, the Indian industry has not yet seen big consolidation such as the cable industry in the US. "The industry (in India) is not ripe for consolidation. The key driver of consolidation would be influx of investment in the sector. However, we see limited investment given the absence of regulation and corporatisation," the research report said.

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