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MUMBAI: The media and entertainment industry will be able to receive
large doses of capital only after sorting out several issues, investment
bankers at a seminar today said.
Size, consolidation and scale are hurdles that prevent serious
investments into the filmed entertainment business, said Carlyle
Asia Investment Advisors managing director Rajeev Gupta, while speaking
at FICCI-Frames 2006 on "Financing options for Indian Entertainment
Industry."
The industry will not be able to absorb capital if the structural
issues are not addressed. "Size will be able to deal with volatility.
Consolidation pressures are there. Scale also has to be built up,
particularly for single theatres. Everybody is so sub scale that
the top six listed film entertainment companies earn just Rs 2 billion,"
he said.
With such issues dogging the industry, Waygate Capital is investing
in ventures like animation and gaming where technology meets entertainment.
"The outsourcing model in animation is not right for India
which is about 20 years behind other Asian markets. China, Philippines
and Korea have developed a maturity. The focus should be on an IP-driven
approach," said Waygate Capital managing director Rajesh Jog.
On the gaming side, however, India can be at the forefront of the
outsourcing model. There is a rich domestic market to tap too. "In
mobile gaming business, we have the chance of becoming leaders. Online
gaming is also likely to see growth," Jog said.
Waygate is planning to float a film content fund. "We are
in talks. We haven't yet decided on the corpus," Jog added.
Which sector is receiving private equity financing? "Broadcasting
and print is where capital is going as there are several organised
players and scalability is possible," said GW Capital Private
Ltd partner Vikram Narula.
The last mile business like film exhibition is seeing capital infusion.
Once addressability is in place, there will be investment opportunities
in Cable TV. Direct-to-home (DTH) will also attract investments.
"Film and TV content businesses have not seen much private
equity. Radio is a new area which can lure in investors," Narula
said, whose company acquired Star's stake in Radio City.
Poor performance by many listed media companies have pulled down
the credibility of investors in the sector. But what will generate
interest in film financing? "Tax structures have to come down
to bring down prices and create more demand. The sector needs consolidation.
Special verticals like film funds have to be floated," said
Ambit Corporate – Finance Pte Ltd managing director Ashok Wadhwa.
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