IBEF Media & Entertainment Last Updated: March 2011 Media and Entertainment (M&E) is one of the fastest

growing sectors in India. The sector consists of creation, aggregation and distribution of content, products and services, news and information, advertising and entertainment through various channels and platforms. The industry is taking initiatives like regional content and distribution platforms (digital, non-digital and mobile) to enhance customer experience as well as monetize content. New technologies such as 3G, broadband and mobile infrastructure are also helping in propelling the growth rate. The Indian economy grew at a faster pace in 2010 compared to 2009, which translated into more advertising as well consumer spending. This high growth rate will continue to remain in 2011 as well. The Indian advertising industry will grow by 17 per cent in calendar year 2011 and is expected to add about US$ 889 million to the existing ad pie worth US$ 5248 million, according to Pitch Madison Media Advertising Outlook 2011. This robust growth in advertising industry will benefit the M&E industry in 2011 as well. The entertainment industry in India is estimated at about US$ 9.4 billion in revenues in year 2010, which is expected to grow at a rate of 14.1 per cent to reach revenues of US$ 10.7 billion in 2011. Television The television industry is expected to grow by 12.9 per cent cumulatively over 2009-14. The maximum growth is slated to occur in 2010 (15.6 per cent), followed by 2012 (13 per cent), according to a report by PricewaterhouseCoopers (PwC). The television industry is expected to grow above 20 per cent in 2011. Two important cricket events - World Cup and the Indian Premier League (IPL) are expected to boost the television advertising revenue. Cricket is expected to earn advertising revenue of US$ 405 million from its television telecast this year, up from US$ 337 million in 2010. The direct-to-home (DTH) market in India had 23.1 million active subscribers by the end of 2010, as per Media Partners Asia. This amounts to 16 per cent penetration of television homes in India. With advertisement revenues strengthening, M&E players are aggressively entering the television (TV) broadcasting space. Broadcasters have added 444 television channels in the last five years with over 100 channels getting added in 2010 alone. Last year saw the second highest additions of

television channels in the decade after 2008 which saw a record permission for 152 channels. The Ministry of Information and Broadcasting has granted permission to 39 channels including nine high definition (HD) channels from Star India, ESPN and Sun TV network in December 2010 and January 2011. In the next twelve months, television's ad revenue is slated to grow by 20 per cent to add. The TV ad revenues will touch a total of US$ 2804.3 million) in 2011, according to Pitch Madison Media Advertising Outlook 2011. (as on March 2011) The report also projects that TV will remain the highest grosser of revenues in 2011 too. It is expected to corner 45.7 per cent of the total ad pie this year, a further rise from 44.5 per cent in 2010. Times Network, Sahara Group, Colors and newspaper company Matrubhumi are planning the launch of their new TV channels. AETN18 also received Foreign Investment Promotion Board (FIPB) approval for the launch of specialized channels in India. Reliance Broadcast has initiated a buyout of Turner-controlled Bollywood music channel Imagine Showbiz. Music The music industry in India has always been dominated by film music, which contributes to 15 per cent of a films earning. The industry is expected to grow at a CAGR of 28.6 per cent over 2010-14, reaching US$ 567.6 million in 2014, reports PwC. With the advent of new technologies such as 2G and 3G, and incresing mobile penetration Indias music industry is scaling on a high note. Handset major Nokia launched its music store in India; Hungama announced the launch of two portals - Hungama.com and Artistaloud and Saregama too launched its music portal. Radio The Radio industry is now in the Phase III licensing stage which will take its station numbers to 700 from the current 250. In 2011, the radio industry is expected clock revenues of US$ 226 million, as per the Pitch Madison Media Advertising Outlook 2011. The radio advertising industry is projected to grow at a CAGR of 12.2 per cent over 2010-14, reaching US$ 342.7 million in 2014 from the present US$ 192.8 million in 2009, as per PwC.

Cinema India is the largest film producing market in the world with over 1,000 films released every year and 3.7 billion tickets sold annually. The Indian film industry is set to top revenues of US$ 3.3 billion by 2010 as it rides new technologies and a booming economy set to expand at the rate of 18 percent per year. It is also one of the largest employment sectors in the country. The government of India gave the motion picture industry the status of an industry in 2001, making it easier for film producers to obtain institutional financing. According to PwC, the industry is projected to grow at a CAGR of 12.4 per cent, reaching US$ 3.65 billion in 2014 from US$ 2.03 billion in 2009. Advertising The Indian advertising industry will grow at 17 per cent to clock US$ 6136.2 million in 2011, reported by Pitch Madison Media Advertising Outlook 2011. The print media generated advertising revenue of US$ 2.2 billion, growing at 28 per cent compared to 2010; while television advertising generated US$ 2.34 billion, grabbing the biggest share of 44.5 per cent of the entire advertising pie. The Out Of Home (OOH) advertising medium grew by 27 per cent in 2010, commanding US$ 320 million of the total ad spends. Radio advertising too has grown by 30 per cent to become a US$ 199 million industry. Internet penetration in India reached an all time high with 50 million plus connections in 2010. As per Internet and Mobile Association of India (IAMAI), the total Online Advertising market of India is estimated at US$174 million for the year FY2009-10 and is expected to grow to US$220 million in year FY2010-11. The internet market is currently dominated by display ads and is expected to remain so for the next year. Total Display advertising market of India in year 2009-10 is estimated at US$ 92.5 million and is expected to grow by 28 per cent to reach US$ 118 million in year 2010-11. Total text advertising market of India in year 2009-10 is estimated at US$ 81 million and is expected to grow by 25 per cent to reach US$ 102 million in year 2010-11. Banking, Financial Services and Insurance (BFSI), Travel and Online Publishers - the top three text advertisers of FY 10 are expected to continue to lead text based advertisers in FY11 as well. Theatre Midvalley Entertainment Ltd., a media and entertainment company, recently raised US 13.4 million through an IPO. The company has plans to invest US$

3.3 million of the amount in screening agreements with 300 cinema theaters in Tamil Nadu, Andhra Pradesh and Karnataka, while US$ 5.8 million will be invested in the renovation and upgrade of cinema infrastructure with digital equipment and other related assets for select 100 screens in South India. Multiplex chain Cinemax plans to add 30 digital screens to its existing 105 screens across India in the next six to eight months, most of which will be located in western and southern states. The investments for the 30 screens will be in the tune of US$ 10 million. PVR Cinemas presently runs about 142 screens at 32 locations across 18 cities in India and plans to open another 80-100 screens in FY 12 in at least 27 cities, at an investment of US$ 22-26 million. Digital Media The Information and Broadcasting (I&B) Ministry has accepted a proposal by Telecom Regulatory Authority of India (TRAI) to make broadcasting operations completely digital. The timeline decided for closing the analog cable distribution has been decided for March 2015. A report by ICRA states that the industry requires an investment of US$ 3.37 billion to go for the digital system. India is the third biggest Internet market, with over 100 million internet user base and the amount of time spent on the Internet for an average user in the country is 16 hours a week. According to Google estimates, 40 million users access Internet through mobile phones and download 30 million applications. Print and Publishing The newspaper market in India has grown at 13 per cent compound annual growth rate (CAGR) over the last five years to US$ 3.9 billion in 2010 will continue on its growth trajectory at an estimated CAGR of around 12 per cent between 2010 and 2013 to reach US$ 5.9 billion in 2013, according to Ernst & Young India,. As per the Indian Readership Survey (IRS) for the third quarter of 2010, conducted jointly by the Media Research Users Council (MRUC) along with research firm Hansa Research Group Pvt Ltd, Dainik Jagran, published by Jagran Prakashan, continues to be the most preferred newspaper in the country.. Amar Ujala, which launched an NCR edition in February 2011, is the No 4 newspaper according to IRS Q4, 2010. It has lost a marginal 125 thousand readers and its total readership is down from 29.7 million to 29.6 million. The No 1 Bengali daily, Anandabazar Patrika is at No 10. The Times of India,

India's No 1 English daily, continues to be at No 11 with a total readership of 13.8 million. It had gained 114 thousand readers in Q3, 2010, while in the Q4, it has added 204 thousand readers. In Mumbai, the average issue readership (AIR) has grown from 6,06,000 to 6,27,000. Total Readership (TR) across all Hindustran Times editions have risen from 63,33,000 to 64,57,000. In Mumbai, the TR figures have increased to 9,73,000 from 9,43,000 in Q3. Foreign investment, including foreign direct investments (FDI) and investment by non-resident Indians (NRIs)/person of Indian origin (PIO)/foreign institutional investor (FII), up to 26 per cent, is permitted for publishing of newspapers and periodicals dealing with news and current affairs under the Government route. FDI policy for publication of Indian editions of foreign magazines dealing with news and current affairs is:

Foreign investment, including FDI and investment by NRIs/PIOs/FII, up to 26 per cent, is permitted under the Government route. 'Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news. Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information and Broadcasting (I&B) on Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals 100 per cent FDI is permitted under the Government route.

Publication of facsimile edition of foreign newspapers:

FDI up to 100 per cent is permitted under Government route in publication of facsimile edition of foreign newspapers provided the FDI is by the owner of the original foreign newspapers whose facsimile edition is proposed to be brought out in India Publication of facsimile edition of foreign newspapers can be undertaken only by an entity incorporated or registered in India under the provisions of the Companies Act, 1956 Publication of facsimile edition of foreign newspaper would also be subject to the Guidelines for publication of newspapers and periodicals dealing with news and current affairs and publication of facsimile edition of foreign newspapers issued by Ministry of Information & Broadcasting on 31.3.2006, as amended from time to time.

Government Policies The Ministry of Information and Broadcasting (MIB) has set up a committee to assess the current rating system for television rating points (TRP) of TV programs and has expressed concern over this current system of evaluation. The MIB has recommended increasing the sample size and switching to a more scientific approach for accurate data. It has also proposed an increase in the sample size from 8,000 homes to 15,000 urban and rural households over a period of two years. It further recommends that this figure should increase to 30,000 over the next three years, covering urban areas, rural areas and small towns as well as Jammu and Kashmir and the North-Eastern States, to provide complete geographical coverage of the country.