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‘M&A’ yet to take off in the Entertainment Sector

22-August-2002
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‘M&A’ yet to take off in the Entertainment Sector

The mergers and acquisition market in television broadcasting is shallow with very few deals materialising so far, says Ernst & Young partner Sanjiv Agarwal.

“Some media companies are scouting for strategic partners but there are very few buyers in the market,” said Mr Agarwal, who handles corporate advisory services in Ernst & Young.

Regional language broadcasters particularly are finding the going tough and some like Prabhat have even closed down operations. Some companies have appointed consultants to value their assets but they are yet to find a financial partner.

The primary interest of mainstream broadcasters is not in buying channels but putting in place a distribution bouquet. Broadcasters are interested in having distribution alliances to add to their All-India bouquet of channels. They are, in any case, reaching the northern, western and eastern regional language markets through their flagship Hindi entertainment channel. Language free-to-air channels do not see much value-sharing in this as going pay would affect their reach and, hence, advertising revenues.

According to sources, the southern language market is what would attract mainstream broadcasters. But it is dominated by Sun Network, thus making acquisition in other channels not lucrative. Star’s entry into Tamil Nadu through Vijay TV is still to gain dominance in the southern market.

Deals are also affected due to a mis-match between price expectations and the actual price offered by the acquirer. Smaller companies are waiting for the market to pick up and are sustaining losses or making small profits while bigger players wait for them to bleed further before going in for the kill.

Some production houses like Mukta Arts are looking at buying into TV content companies but are not ready to spend too much money.

Venture capital funding has almost stopped. “VCs are not investing in small companies across all sectors. There is no exit for them. An initial public offering (IPO) is not possible. They are looking at mature companies where they can exit easily,” said Mr Agarwal.

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