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- Interpol denies India's request for red corner notice against Zakir Naik, cites lack of evidence as reason
- The Rebooting Of Rahul Gandhi, 49th Congress President
M&E witnesses spurt in mergers and acquisitions in 2014
MUMBAI: The Indian media and entertainment (M&E) industry saw a spurt in mergers and acquisitions (M&A) activity in 2014.
Compared to 2013, when only 26 transactions took place in the sector, there were as many as 61 M&E transactions in 2014. Deal values also increased from $224 million in 2013 to $2,380 million in 2014, as per FICCI KPMG report for the M&E industry for 2015.
While 2013 had showed a slowdown in transaction value and volume due to concerns regarding economic uncertainty, industry trends such as availability of credit and financing in the sector led to an increase in the value of activity in 2014.
Specifically, investment in the sector continued to grow on the basis of a few significant themes such as market consolidation, portfolio diversification, digitisation and capital raising for expansion.
As per the KPMG report, deal volume in 2014 can be predominantly seen in the digital sector, one of the fastest growing segments in this industry. It continues to ride the wave from 2013, wherein 42 per cent of all sector transactions were in the digital space. Strategic and private equity investors primarily invested in digital marketing, digital entertainment, social media, e-retail, e-publishing, and mobile applications space.
Deal activity in the television and films space has been primarily due to market consolidation.
Notable marquee transactions for 2014 are as follows:
- Reliance Industries Ltd acquisition of Network18 and TV18 Broadcast for $1,167 million and $257 million respectively.
- Acquisition of BIG Cinemas by Carnival Films for $111 million
- Acquisition of Reliance MediaWorks Ltd by Prime Focus Ltd for $61 million
- Acquisition of Radio City by the Dainik Jagran Group for $60 million
Meanwhile, most private equity investments have been in the digital media space. These include:
- Silver Eagle’s acquisition of a 33.5 per cent stake in Videocon d2h for approximately $300 million
- The Carlyle Group invested $59 million in Newgen Knowledge Works
- Bessemer Venture Partners invested $38.5 million in Hungama Digital Media Entertainment Pvt Ltd
- SAIF Partners invested $25 million in Bigtree Entertainment Pvt Ltd
- SoftBank Capital invested $5 million in InMobi.
The television segment did not see much deal activity in 2014, in terms of volume. However, this segment constituted 79 per cent of deal activity in terms of value. This is primarily because RIL, through Independent Media Trust, acquired control of Network18 and its subsidiary TV18 Broadcast.
In the distribution space, apart from Silver Eagle’s acquisition of 33.5 per cent stake in Videocon d2h, Hathway Cable & Datacom also raised $49.45 million by private placement of shares.
With TRAI’s recommendation of increasing FDI limit for FM radio services to 49 per cent and Phase III auctions round the corner, many players are expected to enter new markets through M&A rather than going through the auction process.
This is likely since the cost of setting up and running a station, as well as getting the required licences is high for smaller players in India. It would also be an opportunity for players to enter the market that are not open for auctions. Local players will be looking at M&A to enter the metropolitan cities like Mumbai and Delhi, the report said.
“This trend of consolidation has commenced with acquisition of Radio City by the Dainik Jagran Group. By adding Radio City to its portfolio, the Jagran Group is able to access an organised operator with an already established presence in large metropolitan cities such as Delhi, Bangalore and Mumbai as part of its network of 20 stations. We could see the trend of market consolidation continue, as smaller players drop out or get absorbed by larger players looking to expand into new geographies,” the report noted.
Next Mediaworks also announced a private placement of common shares for gross proceeds of $1.1 million.
Films, animation and VFX
This segment experienced a high level of interest from strategic and private equity players in areas of cinema exhibition and postproduction. Transactions in this segment are driven by market consolidation.
Carnival Films acquired BIG Cinemas for $111 million and HDIL Entertainment for $18 million. They also acquired Stargaze Cinemas from Network18 Media, to become one of the largest cinema chains in India.
Inox Leisure acquired Superior Films for $30 million to expand its presence in New Delhi, while Fun Cinemas was acquired by Cinepolis India.
Adhikari Brothers Television Network, Abundantia Entertainment, High Ground Enterprise, B.A.G Films and Media and Encash Entertainment raised more than $10 million from various investors.
Tribune Digital Ventures Singapore acquired Whats On India Media for $35 million.
Deal activity in print was driven by the theme of consolidation and portfolio diversification. Exposure Media Marketing acquired consumer magazines division from Media Transasia India (MTI) to get access to titles such as ‘Travel and Leisure South Asia’, ‘Better Homes and Gardens’, ‘Sports Illustrated’ and ‘Child’. MTI publishes more than eight special-interest magazines, focused on a wide variety of interests.
S Chand & Company acquired a majority stake in Saraswati House looking to expand into new avenues of publishing such as Hindi, Sanskrit, French, and arts and crafts.
GBN Media announced receipt of $2 million in equity funding from new investor DOIT Creations Group.
Advertising agencies and digital media
There has been significant interest in both strategic and private equity investments in advertising agencies, digital and mobile marketing, social networking, digital entertainment, online retail, etc.
International strategic players also continued to show interest in expanding their presence in India. The maximum deal activity has taken place in this segment. However, it constituted only nine per cent of deal activity in terms of value.
Strategic investors primarily invested in digital marketing companies along with digital entertainment and social media space.
The deals included:
- Bates CHI & Partners agreed to acquire Temple Advertising, a boutique advertising agency for $34 million.
- Infibeam.com has acquired Odigma Consultancy, a digital marketing company for $5 million.
- Times Internet acquired cricket news and information portal Cricbuzz.com from Akuate Internet Services.
- Saatchi & Saatchi India acquired 51 per cent stake in Law & Kenneth Communications (I) Pvt Ltd, an ad agency focused on digital advertising.
- Omnicom’s local arm DDB Mudra Group has acquired Bangalore-based digital solutions company 22feet Communications.
- JWT India acquired majority stake in Social PR Outsourcing, a social media agency.
Private equities continued to show interest primarily to fund companies operating in digital marketing companies along with e-retail, e-publishing, digital entertainment, and mobile applications.
- The Carlyle Group invested $59 million in Newgen Knowledge Works, an e-publishing services company.
- Hungama Digital Media Entertainment announced that it had received $38.5 million from Bessemer Venture Partners which it will use to upgrade mobile applications.
- Bigtree Entertainment, which owns BookMyShow, announced receipt of $25 million from SAIF Partners.
- Canaan Partners and Accel Partners invested $15.6 million in SureWaves MediaTechnologies.
- InMobi announced that it had received $5 million from existing investor SoftBank Capital.
- Bharti Softbank bought the remaining stake in Y2CF Digital Media, owner of Hoppr, a location based check-in service that works across all mobile devices.
- Vizury Interactive Solutions, a digital marketing company, secured funding of $16 million from Intel Capital and Ascent Capital to drive product innovation and scale operations in existing markets.