Riding to success on the media boom11 min read . Updated: 05 Oct 2008, 11:29 PM IST
Riding to success on the media boom
Riding to success on the media boom
Isabel Wiesmann’s work used to take her across Europe with some regularity. These days, she finds herself increasingly flying to New Delhi, Mumbai, even Kochi, as more and more business for her company comes from India. “I’m not complaining. I love travelling here," says Wiesmann, a director in charge of Europe and India at The New York Times Syndication Sales Corp., the firm that sells reprint rights for The New York Times content to media firms across the world. “India is among our larger markets now," she says, declining to mention sales figures.
Wiesmann’s firm is only one of the many Indian and international firms that have enjoyed robust growth by selling a host of products and services to India’s fast growing media industry.
India’s media and entertainment industry is estimated to be a Rs51,260 crore business, according to a study by Ficci (Federation of Indian Chambers of Commerce and Industry) and PricewaterhouseCoopers, or PwC.
It is expected to grow at a compounded annual growth rate of 18% to become a Rs1.16 trillion segment by 2012, thanks to a relatively underserved market and relatively low spending on ads. Of the nearly 200 million households, 115 million are homes with TV, even though only 70 million are so-called pay-TV homes. Only 38% of India’s literate population reads any newspaper—around 359 million literate Indians do not read any newspaper. The spending on ads to GDP ratio is a low 0.4, compared with a global average of 0.9.
With plenty of scope for growth, media companies are on an expansion spree, entering new segments and new territories. This expansion, coupled with the entry of traditional media firms into television and new media, has meant good business for firms that provide specialized products and services. Consulting firms, large-scale newspaper distributors, printing presses, television equipment vendors, newsroom software makers, even syndication services, everyone stands to profit from the boom.
Smita Jha, associate director at PwC, says that as the media industry grows, such ancillary businesses will also grow. “As the industry grows further, more and more such opportunities will emerge and we will see entrepreneurs coming up with solutions that will help with cost reduction and easing the margin pressure for the mainstream media companies. We’ll see shared platforms—every TV station doesn’t need to have its own uplinking facility, for instance. In telecom, we saw the emergence of the tower development and maintenance business. Similarly, I think in media also we’ll see businesses to whom media houses will outsource several functions," says Jha.
When Kerala’s Malayala Manorama Co. Ltd, which has stuck to its core publishing business for 120 years, decided to venture into news broadcasting, it was Sanjay Salil, a newcomer in the television consultancy business, who helped them start up. “We engaged (him) because we felt that Sanjay has a good understanding of television news, having been part of the start-up team at Aaj Tak," says Jayant Mammen Mathew, deputy editor and chief general manager at Malayala Manorama.
Salil runs MediaGuru Consultants Pvt. Ltd. Steady demand from media houses that want to open TV stations has helped him scale up the business and his firm is now diversifying into Web and digital signage businesses.
Even for firms that sell products to media companies internationally, India has emerged as a big market. “All the leading printing equipment makers are bullish on India," says Roy Alex, chairman and managing director of Newstech India Pvt. Ltd, a Mumbai-based firm that represents German printing press maker Koenig and Bauer AG, among others.
“We first came in touch with Alex when we were buying KBA machines for DNA in Mumbai, since he is their representative in this region. Since then, we have bought equipment for our plants in Ahmedabad, Jaipur and now Bangalore. Apart from the printing press, we have also bought mailroom systems from him and we are now considering the ink supply system for the KBA machines also from him. In all, close to Rs300 crore worth equipment we have bought from him and we have been happy with his services," says R.D. Bhatnagar, chief technology officer, Bhaskar Group.
Alex’s statement about India’s importance is confirmed by Roman Birickai, marketing head at Octopus Newsroom, a London-based firm that makes television newsroom software. TV channels using Octopus software are on air in France, Poland, Slovakia, Hungary, Pakistan, Bangladesh, India and most other countries through Al Jazeera English, an international news channel. For the company, India is the biggest and most important market, Birickai said in response to an emailed questionnaire. “We can state contentedly that the percentage and the growth in India rises admirably and the expectations for the future show that it is going to grow even more rapidly."
The crisis in the global financial markets could puncture the exuberance to some extent. “Slowdown will impact us, no doubt about that," says Alex. “I think new projects will be on the back burner for a while now, at least till the second quarter of next fiscal. But we have to live through this, there is no way to escape something that is hitting everyone."
Salil differs. “I have not seen any kind of slowdown so far, to be honest," he says. “Money has been already raised for most of these projects and entrepreneurs are going ahead with it. Even this week I have got new projects from relatively smaller players. But yes, if the situation worsens, there will an impact," he adds.
Campaign profiles a few of the entrepreneurs who are benefiting from the media boom.
Making the most of tremendous growth
Chairman and managing director, Newstech India Pvt. Ltd
This Mumbai-based printing technology specialist-turned-entrepreneur made his fortune by helping newspaper companies, hungry for expansion, set up printing presses with the latest technology. “The last five years have seen tremendous growth in the industry and we have benefited from it," says Roy Alex.
Over the years, Alex has brought in the latest technology, helping mechanize a printing operation end-to-end, raising efficiencies and lowering costs. “The trend in the industry was towards mechanization. Automate as many processes as possible," says Alex. “We forged tie-ups with the leading providers of these technologies from around the world and we marketed it here. The market responded very well."
Newstech has formed two joint ventures—one with Idab Wamac International AB, a Swedish firm that provides technology to automate post- production processes such as bundling and packaging, and another with Betz Technologies GmbH, a German firm that makes ink-pumping systems.
The joint ventures now manufacture these systems in India for distribution locally and for export. Alex is also the South-East Asia representative of Koenig and Bauer AG, or KBA, a German firm that is the world’s oldest printing press maker—it was founded in 1817.
For global leaders such as KBA, India is now among the most important markets, says Alex, who has 84 employees in six offices across the country and boasts an annual turnover of Rs18 crore. Alex’s clients include the publishers of some of India’s leading publications, such as The Times of India, The Indian Express, Hindustan Times, Delhi Press, Anand Bazaar Patrika, Deccan Herald, Deccan Chronicle, The Hindu, Dinakaran, Malayala Manorama, Mathrubhumi and Dinamalar.
AAKAR PATEL & RAJESH TAHIL
Co-founders and directors, Hill Road Media Services Pvt. Ltd
“The markets were not doing very well and the brokers didn’t want to hire," says Patel. So, he joined The Asian Age and has since worked as the resident editor of the daily in Mumbai, group editor-in-chief for the Mid Day Group, and editor of Divya Bhaskar, a Gujarati daily, apart from a sales job he held at publisher Dorling Kindersley India in Bangalore.
In 2006, he quit Divya Bhaskar and launched Hill Road Media Services Pvt. Ltd with Rajesh Tahil, the former publisher of Mid Day, to serve overseas clients looking to outsource editorial work to India.
“Now, we have about eight clients and 40 staffers—writers, editors, designers and photographers. We broke even in the first year of operations and have been expanding gradually," says Patel.
Tahil says the firm clocked revenues of half a million dollars (about Rs2.35 crore) in the first year and should enjoy 35-40% growth this year.
The company serves clients in Australia, West Asia, UK and India. In India, it runs a website for Star India Pvt. Ltd, produces a magazine for Lafarge Cements, provides entertainment content for Delhi tabloid Metro Now and runs some websites for Bennett, Coleman and Co. Ltd.
While Patel says business has more or less panned out as per initial plans, any move to get editing and page-making work from newspapers in the West has been met with resistance from unions there. “Unlike other sectors, outsourcing media work is slightly tricky because of a certain level of unionization, and because we are all used to having local newsrooms. But it’s happening slowly and once a newspaper outsources successfully, many more would immediately follow."
Patel is now in talks with a strategic investor. “Business can now take two directions. Either we will scale up on the content side, or we will launch our own brands. If the latter happens, then maybe we will need some funding," Patel says.
Hill Road Media happened out of a desire to do something big, say the partners. “Also, today it is possible to run a world-class editorial operation from some Indian cities," says Patel.
Little margin for error
Proprietor, Preet Enterprises
Singh distributes newspapers from the printing presses in Delhi to at least 70 distribution hubs across the National Capital Region (NCR). It’s an operation with little margin for error: even a delay of minutes can lead to tens of thousands of copies remaining undistributed, and Singh says the business offers very narrow margins of profit in any case.
Costs are going up steeply but presses are not agreeing to raise rates accordingly, Singh says in Hindi.
Singh’s Preet Enterprises handles the entire distribution of newspapers such as The Indian Express, The Tribune, Business Standard and parts of The Times of India and Hindustan Times.
He also handles the distribution for the Delhi editions of several regional newspapers. Each morning, he presses into service about 100 vehicles—vans and mini trucks, some owned by him, others contracted.
Last year, his company’s turnover was Rs1.5 crore.
Singh’s father has been in the business since 1963 and still handles the distribution in the neighbouring cities of Jaipur, Chandigarh and Dehradun. Singh says expansion can only be organic, taking on one new project at a time and scaling up as per need.
Managing director, MediaGuru Consultants Pvt. Ltd
“We now have 40 full-time staffers and another 50 we contract frequently. We have set up 10 channels in India, Pakistan and Bangladesh and now we are getting business even from the US and Europe," Salil adds. He declined to give revenue figures but said that revenues from consultancy fee alone will touch $2 million (about Rs9.4 crore) this year.
MediaGuru’s clients include media firms such as Jagran Prakashan Ltd, Malayala Manorama Co. Ltd, The Rajasthan Patrika Group and DB Corp. Ltd, which publishes Dainik Bhaskar, among others. More and more business is now coming from regional players. His firm is busy setting up what he claims is the world’s first end-to-end high definition news channel for Hyderabad-based Jagati Publications Pvt. Ltd, the publisher of Telugu daily Saakshi, which was launched recently. MediaGuru is also setting up a television channel focusing on retail for an Atlanta, US-based retail firm. Salil declined to name the company, citing confidentiality agreements. “We are now setting up offices in the UK and the US," Salil says. The success of his consultancy business has encouraged him to spin off two subsidiaries.
His Web business, Mediaguru Web Pvt. Ltd, has launched two cricket portals and a media portal is in the offing, while an outdoor ad subsidiary, Mediaguru Digital Pvt. Ltd, is launching a “dynamic and interactive digital signage business" in October, he says.
Chairman and managing director, Zoom Communications Ltd
“In those days the equipment that was available was junk if you wanted to do quality work. So we decided to buy a Sony 537 camera. Then our friends started leasing it from us because we had the best quality equipment. That way we accidentally came into this business," says Kant, who now runs Zoom Communications Ltd, one of India’s biggest providers of outdoor television production facilities.
Kant is preparing to take his company public next year. He says the firm is planning to file a draft red herring prospectus with the Securities and Exchange Board of India by August.
When Kant set up his company in 1994, equipment leasing was only part of the business. His focus was on content production. “In 1996-97, there was a broader economic recession which also affected media. Then gradually, most content production moved to Mumbai. We were all hit as only news production was left in Delhi and none of us wanted to wait at the office of some babu (official) in Doordarshan," he says. Doordarshan is the public broadcaster. In 2000-01, things started changing. “We did some work for Sahara TV, which had just opened. We then helped set up Asianet World, Jeevan TV (channels) and did some more work in south India... In 2004, we went to Mumbai and realized that we were leap years ahead in terms of the level of technology they were using there," says Kant.
“Broadcasters found it easy to work with us because we have done content production and we understand what they need," he says.
Revenues this fiscal will be in excess of $25-30 million (about Rs117-140 crore), he says. “We have enjoyed 70% year-on-year growth for the past four years or so, and next fiscal, we are looking at acquiring at least one outdoor broadcasting company in Europe."
Some of India’s biggest televised events, such as the Indian Premier League cricket tournament, and reality shows such as Bigg Boss are powered by Zoom’s machines. The slew of reality shows on Indian television has meant good business for Zoom. Kant now employs 110 people and hopes to add another 100 in the next year.