Global Media giants flock to India

By INDRAJIT BASU, UPI Business Correspondent   |   May 11, 2004 at 3:58 PM

CALCUTTA, India, May 11 (UPI) -- Call it a new wave sweeping the Indian media, or simply a late realization by the global media giants of India's market potential. Leading players from the global media industry are now flocking to the sub-continent, giving its media landscape an international sheen.

There has been a flurry of media deals lately involving foreigners and India could soon wake up to a host of global tittles like the Financial Times, Business Week, Eve, Top Gear, Par Golf, and the Wall Street Journal.

The interest of the foreign media was roused with the media mogul Rupert Murdoch's deal last September, when bowing down to the new dictate of the Indian government that capped foreign shareholding in Indian TV news channels up to 26 percent, Murdoch had to sell 74 percent of his flagship TV channel Star News India, to the local Ananda Bazaar Patrika publishing group.

Since then, the Indian media sector has been experiencing a series of foreign deals. Take the instance of British finance firm Henderson Global Investors that led the bandwagon with a tie-up with the New Delhi-headquartered news daily Hindustan Times. Soon after, London's Financial Times entered into a strategic alliance with the business newspaper Business Standard newspaper. And, not content with just the ABP deal, the Star TV group is reportedly at it again, hobnobbing with the Tata Group-one of India's largest industrial group, for a direct-to-home foray christened Space TV.

There's more. Singapore-based Standard Chartered Private Equity Ltd. has also invested $11 million in a local satellite broadcaster New Delhi Television -NDTV, which runs two popular news channels. Meanwhile, the Times of India Group, India's largest media house, and the BBC, one of the world's biggest media conglomerates, have signed a memorandum of understanding to explore a partnership in magazine publishing.

According to the Times of India Group, this agreement could see the launch of some of BBC's magazines that includes widely-known tittles like Gardeners' World, Good Homes, Good Food, Eve, History and Top Gear.

The rash of deals follows a landmark decision when the currently ruling Bharatiya Janata Party-led government, on June 25, 2002 allowed foreign investors -- including foreign media groups -- to buy up to 26 percent in Indian print media. The floodgates opened. Newspaper owners saw the opportunity to rope in strategic investors, who could improve the quality of their products and pump in fresh funds. For foreign media firms, it was an easy entry into the multi-billion advertisement revenues per year Indian media industry.

But the Indian markets wasn't an easy entry initially. Media organizations like the Indian Newspaper Society, the Press Council of India, the All-India Newspaper Employees Federation, the Indian Journalists Union and the National Union of Journalists, as well as opposition political parties had strongly opposed any move to introduce foreign investment in the print media.

Congress, the main opposition party, argued that giving a green signal would be against the national interest. "The Congress' position remains unchanged on FDI in print media, which has been reflected in the cabinet resolution of 1955," said party spokesman Anand Sharma.

Trying their best to thwart the entry of bigger foreign players, were also the biggies of the Indian publishing world, each with its carefully-nurtured turf to protect: the Malayala Manorama Group, which publishes, in the vernacular Malayalam language, the much-venerated Hindu Group, based in the south Indian state of Tamil Nadu and the Eenadu Group, floated by newspaper and cinema mogul Ramoji Rao. Most of these media barons inundated the editorial columns of their publications with articles extolling the role of the media in "guarding national security and social cohesion".

Nevertheless, down the track, Indian media environment changed suddenly and now after a decade of growth, the media business has started facing a saturation point, say experts. Growth in advertisement revenues are down, circulation of many mainline dailies has reached a plateau, and "clearly", according to media experts, "it was time to shift gears: invest to rejig content mix, start new editions to boost readership and revenues, upgrade technologies, or just keep some extra cash around to fight competition."

The March 18, 2003, the government capped the foreign shareholding in TV news channels at 26 percent was another trigger. Channels like Rupert Murdoch's Star and CNBC realized they would need to dilute their stakes in favor of an Indian partner.

However, according Andrew Gowers, the editor of Financial Times, UK, there's yet another significant reason behind the foreign media's recent interest in India.Today, Gowers says, there is a seachange in the foreign media's perception towards India. "Until recently India was perceived as an economy shackled by inward-looking policies," said Gowers, "which was marked by edgy relations with neighbors, and with a tendency not to benefit from the globalization and liberalization winds sweeping across nations."

"But now," he added, "the foreign media is more engaged with Indian affairs than ever before, taking note of its bright aspects such as a healthy economy, and an entrepreneurial industry aided by liberal laws. The media abroad is now keenly watching the direction and achievements in the wake of the reforms undertaken by India, as well as opportunities that arise for global investors. As a result, there is a marked shift in the attitude of foreign investors to the country as a whole and the industry in particular."

Perhaps the biggest beneficiaries of the recent spate of foreign interest are the smaller publications, which have found a ready-made conduit to global capital. For Business Standard for instance, the pumping in of $3.2 million for a 13.85 percent stake in it, has given it access to the editorial and marketing expertise of an international financial media giant. Business Standard, for long has had to face the dishonor of playing second fiddle to the Economic Times, which is part of the powerful Times of India Group that by its aggressive and expensive marketing gimmicks -- aided by a strong balance sheet -- has repeatedly managed to thwart rivals.

For Pearson too, the Business Standard stake is an entry ticket to the promise of the vast, untapped market that is India. With its 1 billion-plus people, this country splurges $1.5 billion per year in advertising on the print media, and a further $1 billion into TV channels. According to a report on the Indian TV broadcasting industry prepared jointly by FICCI with management consultancy firm KPMG, by 2007, 64 million Indian homes will be linked by cable and satellite connections. By then, the overall revenues of TV broadcasters are expected to shoot up to $3 billion.

Like Pearson, BBC Worldwide, which publishes around 50 magazines, too feels that the tie-up Times of India Group would open a plethora of opportunities. "We were excited by the opportunity we saw in India. Our excitement is palpable because in this environment of growth, magazines will grow faster as the economy grows," said Peter Phippen, managing director, BBC Magazines.

Media industry sources say that the foreign deals that India has seen so far are just a glimpse of what is yet to come. Other high-profile deals in the pipeline include a tie-up between BusinessWeek and Cybermedia, a leading Indian publisher of IT magazines; The Intelligent Computing Chip, published by TBW Publishing; Par Golf from Exposure Media; along with rumors circulating that Walt Disney has approached the Foreign Investment Promotion Board to set up an Indian subsidiary. Besides Dainik Jagran, the Hindi language newspaper, whose owner Narendra Mohan was in the forefront of the pro-FDI lobby, is reportedly talking to the Wall Street Journal as well.

Media giants like Bertelsmann, Vivendi Universal and Time Warner have sent their representatives as well to India to do the initial leg-work. Finally, existing financial content and data processing companies like Dow Jones, Reuters, Bloomberg and AFP - which currently operate in India through their 100 percent subsidiaries - are reportedly toying with the idea of seeking fresh equity partnerships.

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