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Ernst & Young Predicts 6-10 % Growth For Indian Magazines

The alternate revenue streams such as events and digital are expected to account for 20%–50% of total revenues within the next 3 years.

BestMediaInfo Bureau | Delhi | September 8, 2010

With the fading impact of the slowdown, the Indian magazine segment increased revenues at 7% y-o-y to reach INR14.9 billion in 2009. A recent report from Ernst & Young, one of the first such reports to be created for the magazine segment, provides a detailed overview on the Indian Magazine segment covering the current scenario as well as future opportunities. It also presents the insights from survey conducted with CEOs from 22 Indian magazine companies, comprising English, Hindi and regional language publications, as well as B2B and B2C titles.

The report titled “The Indian magazine segment-Navigating new growth avenues” captures emerging trends and issues, and presents the evolving operating models of magazine publishers, discusses future M&A opportunities and details certain relevant tax and regulatory issues.

According to Ashish Pherwani, Associate Director, Media and Entertainment Practice, Ernst & Young, “We believe that there is a scope for growth, both in the case of advertising and subscription revenues and especially through alternate revenue streams and digital platforms. A favorable regulatory policy in the Indian publishing sector remains attractive to international players and we can expect to see continued investments in the magazine sector.”

Indian Magazine segment -Current scenario and way forward

According to the report, the Indian magazine industry’s share in the overall advertising market varies from 3% to 4%, and is currently estimated at around INR11 billion. Though this is far lower compared to the global markets, where the segment comprises around 15% of the overall ad spending.  Going forward, while ad and subscription revenues are expected to increase at 10% and 5% respectively, alternate revenue streams such as events and digital delivery are gaining traction, and are expected to account for 20%–50% of total revenues within the next three years.

There is a considerable interest in the magazine segment, and according to report we expect deals to occur at a PE multiple of 15x to 20x and a revenue multiple range of 2x to 4x.With the significant consolidation we would see this emerging trend of larger players potentially acquiring smaller/standalone magazines to quickly achieve scale and add new magazines to their portfolio, thereby reducing clutter and enhancing market share.

The report also states some of the key areas of concern, such as the lack of reliable and cost effective distribution systems, growth in the number of sales outlets, absence of an adequate readership measurement mechanism, increasing amount of time spent by readers on alternate media, the need for regulatory and tax reforms, and certain key operational issues that will be critical in the competitive future.  According to the survey conducted by Ernst & Young, 77% of the magazine company respondents expect to launch new magazines over the next few years.

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