M&E sector witnessed deals worth $1.5 billion in 2012

Growth driven by favourable demographics, acceptance of new media platforms and relaxation of FDI regulations, says KPMG

The deal activity in the media and entertainment (M&E) sector witnessed a significant uptrend in 2012, with 35 transactions at a reported value in excess of $1.5 billion. This is compared to 42 transactions valued at $1.017 billion in 2011 and 27 transactions valued at just $693 million in 2010.

As per KPMG, the growth in the Indian M&E industry has continued to be driven by favourable demographics, consumer acceptance of new media platforms and relaxation of FDI regulations across several sub sectors.

“The value of transactions continue to rise in this sector. With fundamental changes in the value chain and structure in 2012 and with the changes in FDI regulations for TV distribution, we will see significant activity in the next few years as new entrants come in and existing players raise capital or consolidate”, said Jehil Thakkar, Head of Media and Entertainment, KPMG in India.

While the overall number of deals resulting from mergers and acquisitions (M&A) and private equity funding saw a decline from 2011, the M&E sector saw a significant increase in deal value, attributable to few high value transactions.

Marquee transactions in 2012 include Network 18 Media and Investments' acquisition of Eenadu TV for $395 million, Sony Corporation’s acquisition of a 32% stake in Multi Screen Media and Aditya Birla Group’s acquisition of a 27.5% stake in Living Media India Limited for a reported $70 million.

Several private equity funds have made investments in the sector, with the most notable being L Capital Asia, making investments in film and TV production and theatres and Providence Equity Partners making an investment in the cable business.