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Cable companies have high earnings before interest, taxes, depreciation
and amortisation (EBITDA) and are growing twice as fast. Broadcast
TV, radio and margin operate on margins hovering around 40 per cent,
while the other sectors bunch up between 8-15 per cent.
Technology will put the industry on fast forward, the report said.
DVR will be the only technology that will have the maximum impact
on the future of media and entertainment over the next few years.
Balsara pointed out that studies have shown that DVRs are going
to slow down and even bleed the broadcast TV industry. DVRs resulted
in the TV industry letting go of 1.7 per cent of advertising revenue
in 2003. That is going to balloon to a fat 12.5 per cent by 2007.
Ernst & Young interviewed 23 global media and entertainment
CEOs, CFOs and leading financial stakeholders for compiling the
report. The companies that participated in this global study accounted
for combined annual revenues of $214 billion (FY03).
Presenting the report on Tuesday, Ernst & Young head of media
and entertainment practice Farokh Balsara said broadband Internet
access and online advertising would become a key source for entertainment
advertising.
Ernst & Young had invited CEOs and senior executives of Indian
companies to a function where the report was presented. AP Parigi
was the chief guest, while Ernst & Young's John Harley and Indiantelevision.com
CEO Anil Wanvari were among those who spoke on the occasion.
And industry turned up in large numbers: Sony Picture's Uday Singh,
NDTV's Raj Nayak, Media Turf's V. Ramani, Lodestar Media's Nandini
Dias, Hansa Consulting's Pravin Tripathi, Triton Communications'
Ali Merchant, TAM India's Atul Phadnis, Aaj Tak's Nikita Tulsian,
Lemon's Ravi Deshpande were amongst the ones who graced the evening.
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Digital
cable and satellite, digital video recorders (DVRs), online content
distribution and the mainstreaming of electronic games are likely
to impact companies working in old world models.