SECTOR WATCH: Entertainment

Q4 Review: The entertainment industry (visual media, content providers and film distributors) has posted 30 per cent growth in revenues and 123 per cent rise in profit in the March 2007 quarter.

Zee Entertainment was not considered for the study as its quarter-to-quarter financials were not comparable, while Sun TV is yet to announce its fourth quarter results. Balaji Telefilms witnessed 37.25 per cent growth in net profit on the back of 13.23 per cent rise in income from operations.

The profit growth came as the hourly realisations from commissioned programming increased from Rs 0.22 crore to Rs 0.27 crore. Adlabs reported 151 per cent growth in the operating income owing to the merger of Entertainment One India and the digital business of Mukta Digital Exhibition and demerger of the radio business.

Operating margins rose to 47.3 per cent from 24.2 per cent, while the profit growth was restricted to 73 per cent on account of high depreciation.

Trigger: A changing distribution landscape, emergence of new media (internet and mobile) and convergence of platforms triggered a substantial growth in the entertainment segment.

Outlook: Analysts expect investments of Rs 24,000-28,000 crore on distribution platforms, particularly in digital cable, DTH, IPTV, radio, internet, mobile, digital cinema and multiplexes.

The television industry in India loses around Rs 12,000 crore in pay revenues annually to leakages and piracy in the distribution chain, according to SSKI estimates. The under-reporting of C&S subscribers is as high as 85 per cent, as analog cables dominate television distribution.

While the government has initiated the process of making CAS implementation mandatory, the DTH and IPTV penetration would be driven by big-ticket investments of Rs 16,000 crore from players such as Tata Sky, Reliance ADAG, Dish TV, Bharti Airtel, and MTNL.

Digitisation will ensure 100 per cent declaration compared with 16-20 per cent now. Analysts expect advertising revenues to grow by 15 per cent and pay revenues to increase by 30 per cent in four years.