“For us, buying into an existing network would be ideal but that is not available, at least for now. Another way could be to partner with a global strategic player wanting to participate in an India play. So while the broadcast sector remains a focus area, we will take an opportunistic view as we go along.” says Vivek Raicha Executive Director & Investment Head, Emerald Media, KKR’s pan-Asia investment platform, when we quiz him on an acquisition in the broadcast sector.
The company’s assets today include Yupp TV, Amagi Endemol Shine India, Graphic India, Fluence, and Only Much Louder (in Indonesia).
The media shy Raicha talks about critical factors to be considered before making an investment, Emerald Media’s investment plans in the broadcast sector and more in his first-ever interview...
Edited Excerpts -
What do you look for foremost before investing?
We look at 3-4 parameters like current size and scale of the opportunity, market potential, competitive edge, exit scenarios and most importantly the promoter/senior management team. Since we invest in the growth stage, our goal is to find rapidly growing companies, riding on key M&E trends looking not just for financial capital but for operational support and strategic guidance. Given our backgrounds in M&E investing and operations, we see ourselves adding value to help the company grow and achieve its full potential.
Can you take us through the investment cycle from your perspective, which is the most crucial point in your view?
First of all, making an investment itself is a fairly exhaustive exercise for us. Out of the roughly 200 deals that we source every year, we probably do due diligence for 10 and close only 3 to 4. During this exercise, we spend enough time with the promoter to understand his goals and objectives and then align those to ours. For us, an investment cycle is a period of 3 to 5 years and each stage during this period is crucial, however, the first 8-12 months into the investment requires enhanced focus to ensure that operationally we have hit the right wavelength with the promoter and that the company moves in the right direction.
What are the areas that the company is looking to invest in going forward?
The Indian M&E industry is growing at 15% CAGR and is expected to double in size over the next 5 years. Almost all the sub-segments are growing in double digits so we are looking closely at each of them. Some of these are more interesting as they are in the middle of a consumption trend like on-demand content or the beneficiary of a regulatory push like digitisation. Specifically, we really like the interplay between technology and media, as is reflected in our investments in Yupp TV and Amagi. New media is exciting and offers a range of opportunities in content and platforms across video, music and gaming. Other than that, there are consolidation plays in traditional media like C&S distribution, film exhibition etc. that we are looking at.
Can we expect you to invest in broadcast anytime soon?
We have looked at broadcast assets in the past and will continue to do so, however, the space is fairly consolidated with very limited pockets remaining for entry. There are single channel opportunities but it is unlikely they will make a big impact, since large networks have already spread themselves across genres and markets. For us, buying into an existing network would be ideal but that's not available, at least for now. Another way could be to partner with a global strategic wanting to participate in an India play. So while the sector remains a focus area, we will take an opportunistic view as we go along.
What has been the growth of the Indian assets in terms of revenue?
Since our investment, Endemol Shine India has grown 3 times in operating profits but more importantly it has transformed itself into a content powerhouse serving multiple platforms and geographies. OML, a youth entertainment company, has quadrupled in revenues and is now India's leading content creation platform, building valuable IP by owning and operating live events and producing digital video programming. Graphic India, our animation IP company, has adopted a multi-platform distribution strategy, giving content to broadcasters like Cartoon Network, Disney and OTT platforms like Amazon Prime. Our recent investments, Yupp TV and Amagi, are off to a good start as well.
What are some of the interesting trends in the media and entertainment industry we need to watch out for?
1. Digital content will be the biggest enabler for growth in the internet industry in India, as it doubles to $250bn in 5 years. We expect massive proliferation of digital-first media brands like AIB (All India Bakchod). In fact, a lot of existing traditional media brands will probably reorient themselves to being digital-only brands. We also expect widely popular content of the past getting revived on digital and consumed on multiple content formats.
2. Immersive content (VR/AR), though still in its early days will play a big role in the future. Though no research studies can really estimate the potential of this for now, this will be larger than any other format in the years to come.
3. OTT will become mainstream driven by personalisation of content and delivery and real time access on multiple devices and platforms. Instant consumer analytics will become indispensable.
4. Rapid convergence of media, entertainment and technology is interlinking content creation, distribution and consumption experiences. In this environment, cloud-based services will drive content faster from creation to consumption and re-define movement, management and distribution of content. The reason is simple; it is way cheaper.
5. Technology will continue to disrupt the traditional ways of buying and selling advertising as programmatic, geo-targeting, day-parting becomes the new normal. TV and digital measurement will get unified in due course as marketers look for cross-platform strategies.