Adapt Or Perish
If you’re in the media business, cleaning up and consolidating business is the best way to survive 2024. Just ask the biggies.
Welcome to The Impression, your weekly primer on the business of media, entertainment, and content.
If someone shared this newsletter with you or if you’ve found the online version, hit the button below to subscribe now—it’s free! You can unsubscribe anytime.
A quick note: this is this year’s last edition of The Impression. We have a wrap of this year’s best stories coming your way next week. We will be back with a brand new edition on 10 January.
It’s been eight months since we launched the first edition of The Impression—thank you for being part of this community! In over 30 editions since, we’ve looked at the business of social media, music, films and cinemas, streaming, and emerging trends in content.
But one question underpins all our discussions on content and culture: how do you monetise people’s attention?
As we head into 2024, the answer is getting clearer: go big, or go home.
How India’s media sector will navigate 2024
Earlier this month, billionaire Gautam Adani announced an extremely strange transaction. His media arm, AMG Media Networks Ltd, was buying news wire service IANS for the ridiculous price of just ₹5 lakh or $6,000. Along with ANI and PTI, IANS has long been among the most widely syndicated news wire services in the country—all major media outlets use their dispatches when they don’t have a reporter covering a development directly.
Beefing up, buying influence
Now, why the paltry sum? The company’s latest available filings show it made just over ₹9 crore (~$1.08 million) in revenue, less from news and ads and more from publishing custom magazines and periodicals for clients.
But IANS’ balance sheet is a nightmare, or at least it was as of FY22. According to company filings, IANS had nearly ₹17 crore ($2.04 million) in debt, mostly short-term borrowings. A majority of the company’s expenses are in wages and in fees paid to consultants and contributors. In FY22, IANS made ₹1.2 crore (~$140,000) in losses, just a little higher than its loss for the previous year. That financial year, IANS had a negative net worth.
No wonder then that Adani’s media arm was able to snag a super cheap deal.
With this transaction, Adani has a burgeoning media empire at his disposal. Last December, Adani Enterprises acquired legacy media firm NDTV from founders Radhika and Prannoy Roy. And in June last year, AMG Media bought a 49% stake in Quintillion Business Media, the publisher of BQ Prime. This month, BQ Prime was rebranded to NDTV Profit, the erstwhile business news TV channel that is now back on air, more than six years after it was shut down.
In the year since, NDTV’s shares have fallen more than 20% (even though benchmark indices have grown) and its revenue and net profit margin have been stagnating for the last few quarters.
So why do it? There’s value for a billionaire in acquiring influential media brands, even if they’re loss-making and worth only a fraction of their main business. Just like his much bigger rival Mukesh Ambani, Adani is slowly putting together a news business. In picking individual businesses that were hanging by a thread, Adani has managed to help them combine their strengths—NDTV’s TV licence and website along with BQ’s news business teams and now, IANS’ network of reporters and contributors make a better business than any of them did individually.
Besides, controlling a media empire comes with the opportunity to influence public opinion. Jeff Bezos, for instance, bought The Washington Post in 2013, and it is still unable to turn a profit ten years later. Yet, Bezos is reportedly deeply involved in running the paper, offering more funds, making top appointments, and weighing in on news products. Senator Bernie Sanders had accused WaPo of coverage biased against his Presidential run in 2019: Sanders has famously called for higher taxes on billionaires and businesses that pay relatively little taxes, such as Amazon.
On the other hand, media businesses that aren’t beefing up are cutting costs. Take Bennett, Coleman and Company Limited (BCCL) for example. Now that the brothers Samir and Vineet Jain are splitting their family business Times Group between themselves, BCCL is cutting jobs to reduce headcount between its existing print news business and the digital news business it is getting from Times Internet’s demerger. Several reporters working with the Times Group I spoke to said they’ve been warned of upcoming layoffs.
Mergers are so important to Big Media’s survival, top executives are willing to do the unthinkable. Take the case of Zee Entertainment, which has been waiting to merge with the Indian arm of Sony Corporation since December 2021. After multiple delays and regulatory objections, the estimated $10 billion deal is nearly a year past its first deadline. Now, the deal might not happen after all.
Sony reportedly no longer wants Zee Entertainment CEO Punit Goenka to lead the merged entity. Goenka is an accused in a case of insider trading, but markets regulator Sebi has set aside an order restraining him from leading a listed Indian entity. Yet, Sony is firm on two things: the merger must close this week, and Goenka must relinquish control.
Why the rush to merge? Because rival Reliance is about to buy out Disney’s India operations, including Star India and Fox Studios. An initial agreement may have already been signed, and Reliance will own a majority stake in the merged business that includes a bouquet of regional language TV channels to rival Zee’s, a film studio, and the country’s top streaming service. When combined, Sony and Zee have the muscle to take on Reliance’s ever-growing media empire; individually, they stand less of a chance.
In an earlier edition of The Impression, I analysed how multiplex chains PVR and INOX were faring after combining operations into one leading national cinema chain; despite a formidable lead, PVR-INOX is taking time to hit cruising altitude in its growth rate. The upshot is that even after a merger, media and entertainment businesses take time to realise synergies and survive a steady stream of disruption.
Hungry for more
If you can’t consolidate, you must diversify. Most music businesses are struggling to earn money as streaming platforms cut payouts and competition for new music increases costs (read about this in more detail in this edition of The Impression).
What’s a music label to do? Take the case of Saregama Ltd. The leading legacy publisher has found that going up and wide is the best way to grow. In a November investor call (pdf), CEO Vikram Mehra laid out a plan to enter into the live concerts segment, and even nurture brand new artists.
“We have presently signed three artists on a 360-degree monetisation basis,” Mehra told analysts in the call. “We will invest in creating songs for them, their music videos, and marketing these artists on a wholesome 360 degree over the next few years. Not only will we make money from the music that they create, but once these guys get established, we will monetise them by promoting them on the live circuits.” Saregama is also representing established artists such as Diljit Dosanjh for live concerts in exchange for a commission.
Besides, Saregama will also use the influencer management arm of Pocket Aces, the indie studio it acquired earlier this year, to manage these (and other) artists on their roster. Already, Saregama is hoping to use Pocket Aces’ steady stream of OTT originals targeting young adults, a demographic it traditionally doesn’t have access to.
In the meantime, Saregama’s eyes are on the prize. “The biggest shift that we are seeing in the industry is the adoption of subscription-based revenue models by various streaming platforms,” Mehra told analysts in the call. “To support these platforms, all of us have taken a call that we will stop charging them any minimum guarantees… the money that we make from streaming platforms should go up by anything between 150% to 300% as the market moves from a free model to a paid model.” Spotify recently took features such as Rewind and Lyrics behind paywall in India.
Search for meaning
Finally, the one tough spot in India’s media industry next year will be homegrown social media apps. Consider Koo, once seen as a credible Twitter alternative with tacit government support and high-profile launches in Brazil and Nigeria. Now, it is reportedly looking for a strategic buyer even as it struggles to make money (see more details in this edition of The Impression).
Ad spend growth in India slowed this year to just over 11%, and is expected to grow a little more slowly next year. Homegrown social media apps need to figure out their raison d’etre - their reason to exist - if they want to get a significant share of this advertising pie. Already, American Big Tech firms like Snapchat and Reddit are eyeing the Indian market (read more about Snap India’s advertising pitch in this edition of The Impression).
One bright spot is upcoming social media apps built on pseudonymity/anonymity: Hood app raised money at this year’s season of Shark Tank India earlier this year, while rival Grapevine raised funds from Peak XV (formerly Sequoia India).
So, as we head into 2024, expect more mergers, consolidations, and resultant layoffs. Some businesses, stuck at a plateau, might need to find a pivot. Streaming platforms may hunt for ways to make money directly from consumers as the ad market stays soft. Your best chance of survival is to join hands with a rival, or eat up whatever you can afford to, Pacman-style. Or find a billionaire with money burn.
Last Scroll Down📲
Scan the big media headlines from the week gone by
It’s only (key)words…: …and keywords are all that Google has to sell search advertising. Last week, the Delhi High Court ruled that Google can offer MakeMyTrip’s registered trademarks as keywords advertisers can bid for. MakeMyTrip had accused Google of copyright infringement for selling its registered trademarks ‘MakeMyTrip’ and ‘MMT’ to rivals like Booking.com.
Pay to use: ChatGPT maker OpenAI has signed a deal with German publisher Axel Springer to use content from Politico, Business Insider, and other publications for AI-generated news summaries. It’s a landmark deal that could set the template for how media companies manage the threat they face from generative AI; remember, news publishers sacrificed profitability by giving away content for free to social media platforms throughout the 2010s.
Vote for ads: Elon Musk has found a workaround for the steady stream of advertisers walking out the door: elections. X is gunning for $100 million in annual revenue from political ads as the US heads into a presidential election. It’s an ambitious target: in the 2018 midterms, Twitter had earned just $3 million from political ads.
What the f***?: Two people attacked the Indian Parliament last week with coloured smoke bombs, protesting the lack of jobs for India’s youth. But senior journalists covering the incident became the news instead: they physically fought each other on live TV over a yellow canister that was allegedly used by one of the attackers. So much for investigative journalism.
Dissecting this week’s viral ‘thing’
2024 is going to be great fun, or another exercise in dystopia, depending on how you look at it. Elections will be held in India and several other countries, And now that the use of generative AI has become commonplace, we’re about to see startling new use cases of AI in political advertising, the kinds that will probably be studied in the future.
Some of it has started already. This week alone, Pakistan’s jailed former Prime Minister Imran Khan deployed an AI-generated avatar to ask for votes. In the US, presidential candidates are gathering support with an AI-generated robocaller that can have personalised chats with hundreds of voters simultaneously.
Back home, Prime Minister Narendra Modi used a real-time AI translation tool to address a gathering in Tamil Nadu, where he was speaking Hindi and English. The tool, called Bhashini, was developed by the Indian government under the National Language Translation Mission.
The dream election campaign is one where leaders and their parties can speak to everybody, everywhere, all at once. Once upon a time, that required too much money. In 2024, I suspect (and fear) that we will be drowning in political ads and gimmicks all the way to the voting ballot.
That’s all this week. If you enjoyed reading The Impression, please share it with your friends, family, and colleagues. And please write to me anytime at firstname.lastname@example.org with thoughts, feedback, criticism or anything you’d like to see discussed in this space. I'd love to hear from you.
Thanks for reading, and see you again next Wednesday!