Media honchos join private equity firms or start venture funds

As investor interest in a buoyant media and entertainment space is surging, high-profile media honchos are now looking to join media-focused private equity firms or start their owns venture funds by investing and providing operational advice to start-ups.

Today, Haresh Chawla, a former Network18 CEO who was responsible for the group’s growth, joined as partner in India Value Fund Advisors (IVFA). There, he will be responsible for leading IVFA’s media and entertainment investments, and will also be scaling up the businesses owned by IVFA across other sectors. The 1999-established IVFA has in the past done investments of $1.3 billion across various companies, including Radio City and Shringar Films and DQ Entertainment.

Other corporate honchos, too, have made such switches. Rajesh Kamat quit as COO of Viacom 18 and CEO of Colors to join Chernin Group’s CA Media as India CEO. Prior to that, he worked with production house Endemol. More recently Shravan Shroff, promoter of Fame Cinemas, sold his stake to INOX, and started accelerator VentureNursery along with Ravi Kiran, former CEO and managing director of Starcom Mediavest. Both Shroff and Kiran have invested in the accelerator which will mentor start-ups before they go for angel funding. Initially, it will focus on six sectors: media & entertainment, retail, e-commerce, consumer technology, education and cleantech.

IVFA’s Chawla explains the reason behind the trend. “ For over two decades, I have been in an operational role in various companies handling everyday issues,” he recalls. “Depending on the level of experience, rather than just a leadership role in companies, one looks at better avenues where we can value-add and advise in various businesses across the chain.”

In the past, Mohit Mehra of UTV joined Cinema Capital Venture Fund, while Sunaman Sood co-founded Acendo Capital Advisors. Sood was earlier part of the corporate strategy & business development team with STAR India.

Top executives who have changed ship say they did so because gaining the number one position prompts one to look for new challenges. Experts say that the talent pool of executives who understand various aspects of the game is limited, as the media industry is not too old. “The media landscape is changing tremendously,” notes a former CEO of a leading channel. “A recent surge in various delivery and distribution platforms has given birth to various innovative start-ups. Several players are looking to invest with content and technology.”

Even globally, Peter A Chernin, Rupert Murdoch’s long-time top lieutenant, quit News Corporation and formed CA Media (a fund Rajesh Kamat heads in India). To begin with, the company is looking for investment opportunities in media and new-media technology in developing countries and in a traditional media world that is littered with distressed properties. Michael Eisner, who worked with Walt Disney as CEO for two decades, is also planning to start his own production fund for films and television.

Jehil Thakkar, head of the media and entertainment practice at KPMG, notes “a lot of activity and growth” happening in this sector. “Private equity and venture capital players are closely looking at this for expertise, for investments,” he adds. “They also see these companies grow during times of cut-throat competition.”

The recent past has seen a spate of activity among private equity players, including the UK-based 3i, Blackstone, Warburg Pincus, Capital International, Providence Equity and Citigroup, taking a keen interest in media. The last one year has seen a frenzied spell of deals, with 42 transactions valued at $940 million, according to a Ficci-KPMG report. For instance, Providence Equity invested around Rs 260 crore in Ufo Moviez, while HSBC’s PE firm invested around Rs 150 crore in Avitel Post Studioz.

Despite the recent slowdown in the US and Europe, the long-term picture for entertainment and media in countries like India and China remains bright, say industry officials. According to a Ficci-KPMG report, the media and entertainment sector is expected to touch Rs 1,45,700 crore by 2016, with a compounded annual growth rate of 15 per cent.