1. Media & Entertainment September 2006 www.imacs.in

2. MEDIA & ENTERTAINMENT www.imacs.in Market Overview Government regulations & policy Advantage India and business opportunities Contents

3. MEDIA & ENTERTAINMENT www.imacs.in Market Overview Government regulations & policy Advantage India and business opportunities

4. MEDIA & ENTERTAINMENT www.imacs.in Indian Media & Entertainment Industry - Zooming ahead Market Overview Source: IMaCS Analysis, FICCI-PWC Frames 2006 Report Current Market Size is estimated at USD 7.72 bn Expected to reach USD 18.32 bn by 2010, a CAGR of 19% Maximum growth expected in Television and Film segments More than 300 national and regional TV channels Close to 1000 films made every year Liberal FDI policies across all the segments of the industry Government focusing on regulations to give further impetus to the industry India Media & Entertainment Industry 353 402 473 562 686 837 0 200 400 600 800 1000 2005E2006F2007F2008F2009F2010F INR Billion CAGR 19% ** Years E*: Estimate, F*: Forecast

5. MEDIA & ENTERTAINMENT www.imacs.in Major constituents Market Overview Television is the largest segment with close to 42% share in industry revenues followed by print media at 30.9% and films at 19.3% in 2005 Television’s share expected to increase to more than 50% by 2010 at the cost of print media’s share Source: Industry estimates, IMaCS Analysis Breakup of Indian Media & Entertainment Industry Live Entertainment 2% Internet Advertising 0.3% Outdoor Advertising 2.5% Print Media 30.9% Radio 0.8% Films 19.3% Music 2.0% Television 41.9%

6. MEDIA & ENTERTAINMENT www.imacs.in Key Drivers of the Indian Media & Entertainment Industry Market Overview Key Drivers Consumerism Advertising spend Pricing Content Technology Regulation Enabling regulations related to broadcasting, print and radio by the Government Development of content for niche viewers Pricing remains a key driver, whether it is for cable subscription, film tickets or newspaper prices Increased consumerism and increased advertisement spend by marketers (i.e.more revenues for media companies) fueling further growth Use of technology for special effects, animation and other creative work leading to better quality of media products

7. MEDIA & ENTERTAINMENT www.imacs.in Indian Television Industry - Wholesome entertainment Market Overview Source: IMaCS Analysis Indian Television Industry Revenue Breakup - 2005 TV Subscription 58% TV Advertising 37% TV Software 5% Projected size of Indian Television Industry Largest segment in the industry with market size of USD 3.24 bn in 2005 Expected to reach USD 9.34 bn by 2010, a CAGR of 24% Subscription accounts for 58% of the total revenues followed by advertising and software India currently has 105 million TV households and over 60 million cable connections TV penetration expected to increase to 135 million households and cable connections to 85 million households by 2010 E*: Estimate F*: Forecast

8. MEDIA & ENTERTAINMENT www.imacs.in What do the viewers watch in India? Market Overview Source: TAM Media Research Genrewise Television Viewership Share in India 39% 38% 5% 8% 2% 4% 3% 1% News Channels Sports Channels Mass Entertainment Hindi Film Channels Kids Channels Regional Channels English Entertainment Music Channels Mass Entertainment Hindi and regional language channels attract almost 80% of the total TV viewership in India Niche channels like News and Sports gaining ground

9. MEDIA & ENTERTAINMENT www.imacs.in Indian Film Industry - The Bollywood dreams Market Overview Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report & UNESCO Projected size of Indian Television Industry 68 79 97 113 132 153 0 50 100 150 200 2005E2006F2007F2008F2009F2010F INR Billion CAGR 18% Years Largest number of films produced in the world~1000 films every year More than 3 billion tickets sold in 2005 Gross revenues of over USD 1.49 bn in 2005 Expected to reach USD 3.35 bn by 2010, a CAGR of 18% Large scope for growth in number of screens Digitisation of theatres and growth of multiplexes fueling further growth

10. MEDIA & ENTERTAINMENT www.imacs.in Hit or flop - Breakup of Indian films market Market Overview Source: IMaCS Analysis, Industry estimates 54% 2% 2% 10% 17% 15% 1% 8% HindiCrossover Hindi TamilTelugu ForeignMalayalam BengaliOthers Breakup of Films Market in India Hindi films account for almost half of the total market Foreign films, primarily from Hollywood have a market share of 2% Regional language films account for the rest of the market Dubbed Hollywood films a new trend

11. MEDIA & ENTERTAINMENT www.imacs.in Indian Music Industry - Soul searching Market Overview Source: IMaCS Analysis, Industry estimates Unique structure with film and devotional music dominating the market Non-film albums and remixed songs gaining market Total revenues close to USD 0.15 bn in 2005 Expected to reach USD 0.16 bn by 2010, a CAGR of 1% Government and industry taking firm action to reduce piracy of all forms Projected size of Indian Music IndustryGerewise Music Sales in India - 2005 40% 21% 6% 8% 10% 8% 7% New Film Music Popular Music Old Films Music Regional Film Music Devotional International Others 7.0 7.2 7.3 7.4 6.8 7.0 7.2 7.4 7.6 2005E2006F2007F2008F2009F2010F Years INR Billion E*: Estimate F*: Forecast

12. MEDIA & ENTERTAINMENT www.imacs.in Indian Radio Industry - Singing a growth tune Market Overview Source: IMaCS Analysis India has over 190 million radio sets reaching 99% of the population More than 330 FM Radio licenses being allotted by the Government (~240 already allotted) Move from license fee to revenue share model to give a further boost to the industry New platforms to access radio like satellite radio, mobile phone radios and internet radio growing fast Revenues in 2005 - USD 0.06 bn Expected revenues in 2010 - USD 0.26 bn, a CAGR of 32% Ad spend on radio set to increase with more FM radios operational Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report 3.0 3.7 5.5 8.0 10.0 12.0 0.0 5.0 10.0 15.0 2005E2006F2007F2008F2009F2010F INR Billion CAGR 32% Projected size of Indian Music Industry Years E*: Estimate F*: Forecast

13. MEDIA & ENTERTAINMENT www.imacs.in Indian Print Media Industry - Reader’s choice Market Overview Source: NRS 2006 Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report E*: Estimate, F*: Forecast More than 220 million readers of English and vernacular language newspapers and magazines English language newspapers and magazines readership close to 10% of the total base Newspapers account for 90% of the market, Magazines~10% market share Revenues expected to grow from USD 2.38 bn in 2005 to USD 4.37 bn in 2010 Subscriptions contribute 57% of the total revenues, rest by Advertisement Print media, especially newspapers, attracting a large number of strategic overseas investments Projected size of Indian Music Industry Years 21.2 Dainik Jagran Dainik Bhaskar Eenadu Lokmat Amar Ujala Hindustan Daily Thanthi Dinakaran Rajasthan Patrika Leading Newspapers in India Times of India The Hindu Hindustan Times English Vernacular Readership (Million) 21.0 13.8 10.9 10.8 10.4 9.6 9.4 7.4 4.1 3.9

14. MEDIA & ENTERTAINMENT www.imacs.in Government regulations & policy Market Overview Government regulations & policy Advantage India and business opportunities

15. MEDIA & ENTERTAINMENT www.imacs.in FDI Regulations for Indian Media & Entertainment Industry…1 Government regulations & policy Source: IMaCS Analysis (b) FDI up to 26% is permitted in publishing News Papers and Periodicals dealing in News and Current Affairs subject to a few conditions (a) FDI up to 100% is permitted in publishing/printing scientific & technical magazines, periodicals & journals 3. Print Media FDI is permitted for the full value chain like film financing, production, distribution, exhibition and marketing upto 100% through the automatic route 2. Films FDI is permitted upto 100% through the automatic route 1. Advertising Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry

16. MEDIA & ENTERTAINMENT www.imacs.in FDI Regulations for Indian Media & Entertainment Industry…2 Government regulations & policy a)TV Software Production 100% foreign investment allowed subject to a few conditions b) Setting up hardware facilities, such as uplinking, HUB, etc. FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital c) Cable Network FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital. d) Direct-to-Home Maximum foreign investment of 49% paid up share capital include e) Terrestrial Broadcasting FM Foreign investment is permissible to the extent of 20% (including portfolio investment, investment by OCB/NRI/PIO etc.) of the paid up share capital of the company. The licensee should be a company registered in India under the Companies Act. f) Terrestrial TV No private operator is allowed in terrestrial TV transmission. g) Establishment and Operation of Satellite FDI up to 74% is permitted with prior Government approval 4. Broadcasting Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry Source: IMaCS Analysis

17. MEDIA & ENTERTAINMENT www.imacs.in Advantage India and business opportunities Market Overview Government regulations & policy Advantage India and business opportunities

18. MEDIA & ENTERTAINMENT www.imacs.in Advantage India Advantage India & business opportunities Second fastest growing economy in the world Favourable FDI policies for all the segments of Media & Entertainment Industry Regulatory environment being strengthened for faster growth of the industry High quality of creative and technical talent pool Large untapped potential especially in Television and Films Indian consumers willing to spend more on entertainment Growing middle class with more disposable income

19. MEDIA & ENTERTAINMENT www.imacs.in Business opportunities in the Indian Media & Entertainment Industry…1 Television Radio Production/co-production of content Broadcasting of TV channels Distribution of TV channels through cable and new delivery platforms like DTH and IPTV Technology transfer for digital content creation Marketing of TV rights/air times Strategic investment in existing companies in broadcasting, distribution and content Investment in FM and Satellite Radio Content creation for radio channels Marketing of air times Advantage India & business opportunities

20. MEDIA & ENTERTAINMENT www.imacs.in Business opportunities in the Indian Media & Entertainment Industry…2 Films Music Production/co-production of films Processing, distribution and exhibition of Bollywood films Shooting of overseas films in India Development, distribution and exhibition of Hollywood/overseas films Training for technical and functional areas of film making Supply of Hardware to film studios Creation of content for film and non-film music Marketing of film and non-film music Strategic investment in local music companies Print Strategic investment in news and non-news publications Tie-ups for providing content to Indian publications Advantage India & business opportunities

21. MEDIA & ENTERTAINMENT www.imacs.in Key Players - Indian Film Industry Advantage India & business opportunities

22. MEDIA & ENTERTAINMENT www.imacs.in Key Players - Indian Television & Radio Industry Doordarshan is the largest TV network in India with 19 channels reaching 90% of the population through 1400 transmitters News Corporation owned Star TV Network entered India in 1991 and offers more than 10 channels in mass entertainment, sports, news,, music, movies etc. Zee is one of the pioneers of the Indian Television industry with 22 channels in its bouquet. It is present in broadcasting, cable distribution, production and distribution of films, creation of animation software among others Sony Pictures Entertainment is present in India with 3 channels focusing on Hindi entertainment and sports Sun Network is based in South India with 14 channels in four languages and a focus on entertainment, news, movies, music, kids shows among others. Also present in FM Radio Walt Disney is present in India through two kids channels and has recently bought one more kids channel All India Radio, owned by Government of India is the largest radio network in India with 214 broadcasting centres covering more than 99% of the Indian population Advantage India & business opportunities

23. MEDIA & ENTERTAINMENT www.imacs.in Key Players - Indian Music Industry Advantage India & business opportunities BMG is one of the earliest music companies to enter India in a joint venture with Crescendo, an Indian company EMI owned Virgin Records is another international music company operating in India Universal is one of the leading names in Indian music industry with a strong presence across all genres Sony is one of the leading music companies of India with a presence in both Indian and International albums Saregama, formerly known as The Gramophone Company of India Ltd. is India’s oldest music company with largest repertoire of music across all genres and languages including top-recording artistes of the past hundred years

24. MEDIA & ENTERTAINMENT www.imacs.in Key Players - Indian Print Media Industry Advantage India & business opportunities One of the leading English dailies owned by Bennett, Coleman & Co, a leading media group of India Another leading English newspaper with multiple editions published from many states in India One of the oldest newspapers with a strong presence in South India Hindustan Times is another leading English newspaper with more than 4 million readership mostly in North India Published in English and Malayalam, this newspaper enjoys a strong readership in South India. It also publishes a large number of well known magazines in English and regional languages

25. MEDIA & ENTERTAINMENT www.imacs.in The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundation’s primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email j.bhuyan@ciionline.org Web www.ibef.org

26. MEDIA & ENTERTAINMENT www.imacs.in Disclaimer This publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand Equity Foundation (“IBEF”). All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of knowledge and belief of IBEF and IMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF and IMaCS neither recommend nor endorse any specific products or services that may have been mentioned in this publication and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication. ICRA Management Consulting Services Limited