Debunking of a downturn myth

Here’s somethin’ that you’re never gonna forget. Baby, you ain’t seen nothing yet…,” went the lyrics of a popular ’70s rock song. Well, delegates at FRAMES 2009, the annual media & entertainment (M&E) industry conclave held recently, weren’t exactly crooning these lines, but what many of them talked about the impact of the downturn on their trade, it sounded pretty much like it.

Indeed, what came through at the three-day affair in Mumbai on February 17-19 was the fact that the entertainment industry is, contrary to the traditional wisdom, not recession-proof, and it would have to live with lower growth over the next few years.

A FICCI-KPMG report on the Indian M&E industry also re-affirmed the new reality by foretelling a drab Compounded Annual Growth Rate (CAGR) of 12.5 per cent over the next five years against the 18 per cent CAGR predicted by a FICCI-PWC report last year. But some industry observers expected this to be even worse. Also, as per the FICCI-KPMG report, ad revenues are expected to be lower at 12.4 per cent CAGR during 2009-13 compared to 17.1 per cent during 2006-08.

So, how bad can things really get? “About 30-40 per cent of all films made will not be released this year. The marketing expenses are high and in some cases even surpass the film production costs,” predicted Ronnie Screwvala, Chairman and CEO, UTV Software Communications. There could also be a drift from star-driven films to content driven cinema along with tighter budgets and rationalisation of star salaries. Screwvala, however, didn’t think that small-budget films would de-risk losses. “If you make a film for Rs 6 crore, you may end up losing all the money. But if you are making a Rs 50-crore movie, you may stand to lose the same Rs 6 crore. It is not easy to succeed with small-budget content-driven cinema.” But the global media players weren’t as pessimistic. “We are definitely cautious. However, we look at India as a long-term opportunity,” said Peter Smith, President, NBC, who was present at the event.

“We are long-term players and hence we are going ahead and are positive,” said Monica Tata, VP and DGM, Entertainment Networks, South Asia Turner International, of her firm’s plans to launch a Hindi GEC over the next few months. The India story also drew large delegations from the UK and the US, which was the partner country at FRAMES this year. “Media companies in the US are facing real tough times, but here I see a different sense of optimism. And that’s because of the growth opportunities in the M&E sector in India,” observed Donald M. Whiteside, VP, Legal and Corporate Affairs-Direct Global Public Policy, Intel Corporation and head of the US delegation.

The tenth edition of 'Frames' had all the usual pomp and show thanks to the sizeable presence of Bollywood stars, many of whom were feted with the FICCI-IFFA awards. But amid all the glitter, one thing that stood out darkly was the abysmal participation by the industry itself—advertising agencies, media firms, television companies, event companies, and the like. Did the downturn keep them away?