A new report on the industry throws up some surprises

Zee is the largest television group by revenues. However on competitive strengths, Star continues to outrank it. Sun, for all its audience, has slipped from number two last year to number five. But, the biggest surprise is Network18, which has gone up to number three from a distant six.

These, among others, are some of the findings of the second competitive ranking of Indian television groups by Hong Kong-based consultancy Media Partners Asia (MPA). An executive summary of the report was released at TV.NXT, a television industry event held in Mumbai earlier this month. The report titled 'India TV industry at an inflection point' says the industry would expand at a compounded annual growth of 11 per cent to hit $15 billion by 2017, up from $9 billion currently. This is higher than that for China, the US or the UK, but lower than the rocking 16 per cent the Indonesian TV industry would post.

It is, however, the report's ranking of TV networks on a weighted scorecard that makes for the more interesting part. This index is based on seven parameters, including scalability and financial strength.

What emerges is the picture of a confident, consolidating industry, building muscle for the opportunities that digitisation would soon present. As the companies that distribute television signals become powerful, the strength of broadcast networks would become critical too. So, everyone is trying to complete their bouquet. Star, Network18 and Sony have been rushing to acquire or create language offerings that cover the country. This has meant lots of consolidation, like the merger of Eenadu with Network18, financed by Mukesh Ambani. That one deal pushed Network18's score, bringing it towards the top of the league.(THE BIG PICTURE)

Star has bet a massive $700 million on cricket programming, by buying the BCCI rights, and another $300 million, buying out ESPN's stake in ESPN-Star Sports. It is betting that after digitisation its ability to monetise these rights would improve.

But, all this consolidation is still not expected to produce better margins, says the report. This is because the capital requirements for digitisation and for more consolidation will sap any increases in margins. The Indian television industry offers one of the lowest operating margins (13 per cent) among the BRIC nations. In the coming years, however, investors would become more patient with this, as the biggest lever to facilitate growth — digitisation — has been activated. The growth game has begun.