Foreign money in media @ Rs 150 cr

Foreign investors seem to be investing in Indian media and entertainment sector with a vengeance.

In the first four months of 2005 alone, over Rs 150 crore (Rs 1.5 billion) has been pumped into various domestic media companies.

Compare this with Rs 113 crore (Rs 1.13 billion) that flowed in to the sector during the entire 2004 (excluding the investment by Independent News & Media, Ireland, whose stake in Jagran was just approved by the ministry).

Nitin Khandkar, vice-president - research, Keynote Capitals, said: "A rising GDP and the size of the market at $5 billion are some of the factors that have made the media and entertainment sector promising."

Leading the pack is the Hong Kong-based Sony Entertainment Television's acquisition of Sri Adhikari Brothers Television Network's flagship channel SAB TV for Rs 59 crore (Rs 590 million).

In value terms, next comes Americorp Ventures' Rs 31 crore (Rs 310 million) deal to pick up 11 per cent in Nimbus Communication.

BSMA Ltd picked up a significant stake in Adlabs Ltd for Rs 27 crore (Rs 270 million). Adlabs is into diversified entertainment business of cinema multiplex, film processing and production.

Foreign investors are also rushing to invest in newspapers, news channels and television ventures. In February, Americorp Ventures picked up a 9 per cent stake in Asianet News for Rs 6.6 crore (Rs 66 million) and Vernon picked up 26 per cent stake in Jagran TV for Rs 30 crore (Rs 300 million).

In yet another cash-less deal, Reuters picked up a 26 per cent stake in Times Global Broadcasting.

Apurva Shah, senior equity analyst, ASK Raymond James, said, "Media has been a scarce commodity for investors for a long time. However, with the relaxation of investment norms and the upsurge in economy, the sector is on the radar of serious players."

A recent PricewaterhouseCoopers report on Indian television industry points out that India is the third largest television market in the world with an estimated size of Rs 12,000 crore (Rs 120 billion).

The report predicts that the industry will grow at a 12-14 per cent this year and 14 per cent compounded annually for the next five years. A KPMG report anticipates that Indian film industry will be a Rs 10,000 core (Rs 100 billion) sector by 2007.

According to Shah of ASK Raymond James, print media too has witnessed a significant investment due to the expansion of the sector into different territories and the new-found competitive spirit of the news papers.

Analysts feel that the boom will sustain as the foreign players are still not allowed to set shop here. This essentially means that they would always look for strategic partners to gain an entry into the Indian market.