Mumbai : India’s media and entertainment industry has for the first time entered the league of top five in the world in terms of attracting investment, according to the 13th EY Capital Confidence Barometre report. India ranks fourth, behind United States, United Kingdom and China, and ahead of Germany’s M&E sector.
Even as the outlook for many emerging markets has turned negative, investor sentiment towards India is seeing a significant recovery, the report said, crediting the government’s pro-business stance and an increasingly promising economic outlook for fostering a more attractive investment landscape for inbound investment.
EY estimates that the Indian M&E sector is over $20 billion, growing at 15% annually and expected to double in five years.
The multiplex industry has seen the highest number of deals in the past couple of years, according to the report.
The top five deals this year were acquisition of MAA Television by Star India for $ 417 million, pre-IPO buyout of Videocon d2h by Silver Eagle Acquisition Corp for $ 273.4 million, merger of Prime Focus and Reliance Mediaworks that was valued at $166.5 million, acquisition of Big Cinemas by Carnival for $11.8 million and buyout of DT Cinemas by PVR valued at $78.1 million, which is yet to get closed.
The report says the growth is fuelled mainly by the government’s initiatives. The digitisation of cable television, the phase III auction of FM radio spectrum and an increase in FDI limits are expected to drive growth in traditional media, it says.
India is the second largest internet market after China, with over 300 million users. Although digital content consumption is currently tempered by low smartphone and broadband penetration, a surge in broadband adoption is expected with the roll-out of 4G services and the government’s digital India initiative, the report says.
It predicts that by 2016 India’s online advertising market will be a little more than $1 billion, while in China it will be in excess of $23 billion.
John Harrison, the global media and entertainment, transaction advisory services leader at EY, said: “Media and entertainment executives are more confident about the global economy and key market indicators than 12 months ago. However, short-term headwinds, such as foreign currency volatility and earnings pressure from digital transformation are tempering enthusiasm. As the industry learns to better harness digital adoption and fully exploit the multiplatform distribution environment, companies are becoming more confident about expanding their offerings and making strategic acquisitions that will improve their competitive advantage.”
