Entertainment sector to outgrow economy

The Indian entertainment and media industry is expected to outgrow the country's economy every year between 2007 and 2011.

A compounded annual growth rate (CAGR) of 18 per cent is forecast for the industry over the five-year period, according to the sixth Ficci-PwC report, which was released today at the annual media and entertainment convention, Ficci-Frames.

The growth rate is partly due to positive government measures, technological advancements, entry of large corporate players and an increase in the disposable income of Indian consumers.

While TV is expected to increase its market share from 45 per cent to 51 per cent by 2011, the print media's share is likely to decline by 6 per cent from its current 29 per cent market share to 23 per cent in 2011.The other sectors are expected to grow and retain their current market share.

Meanwhile, the government cleared 13 foreign direct investment (FDI) proposals in 2006, according to the report. Further, it is examining 22 more proposals. Over the last three years, the sector has received a little over Rs 400 crore (Rs 4 billion) as FDI, primarily from the non-resident Indians (around Rs 130 crore), Cyprus (around Rs 120 crore), Mauritius (around Rs 64 crore), the US (around Rs 54 crore) and France (around Rs 8 crore).

While the sector has traditionally been dominated by strategic buyers, private equity players are now helping to reshape it. The past two years have seen the likes of 3i, Matrix Partners, Warburg Pincus, De Shaw, T Rowe Price International and IL&FS.

Many M&A deals too spruced up this space in 2006. These include the Rs 250 crore (Rs 2.5 billion) Zee-Ten Sports and the Rs 137.3 crore (Rs 1.373 billion) Disney-Hungama deals. The Rs 602.8 crore (Rs 6.028 billion) Sun TV public issue and the K Sera Sera Productions IPO (Rs 34 crore) were the other significant deals.