Sports Media Sector Presentation

Occasional Papers

Indian Sports Media Sector Coming to age; entering new trajectory

An Introduction May ‘11

Occasional Papers 2 Indian Sports Media

Table of Contents

Indian Sports Media Sector Indian Economy: Oasis of Growth Indian Market: Bird of Gold Indian Media Market: Rising Star Sports Market: Next Wave? Growth of Non Cricket Sports

About Paradigm Advisors Contacts

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India is now the second fastest growing economy in the world with average GDP growth expected at 8% plus, which is nearly thrice average global GDP growth.

Indian economy was least affected in the recent global financial meltdown and crisis and bounced back much faster

than its peers, except China. India being second largest populated country with 1.2 bn population has educated and upwardly mobile middle class

youth of more than 300 mn. Increasing penetration of higher education in lower strata of society and improving employment opportunities is

further enabling growth. More than 70% of the economy is dependent upon domestic consumption of Indian consumer demand and market,

instead of exports, which insulates Indian economy from any global economic and financial problems. With very high Gross Domestic Savings and majority being invested in real estate and gold, against financial

instruments, the impact of market and economic volatility is greatly restricted. Access to natural resources, strong manufacturing, specialization in manufacturing and booming services greatly

diversifies economic risk. India remains an oasis of growth in global economy.

Indian Economy: Oasis of Growth

Indian Sports Media Occasional Papers

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McKinsey Global Institute estimates a CAGR GDP Growth of 7.3% to US$ 1.8 trln in 2025.

Services – which is a higher end of the value chain,

would be the key growth driver. Growing services business and resultant higher

education and income levels would drive increasing consumer spends.

Average Household Income would triple in next 15

years from INR 115,000 to INR 320,000 in 2025. Urbanisation rate is estimated to increase from

current 29% to 37% by 2025. Average Urban Household Income is expected to

grow by 5.8% for 2005 – 2025 from 4.6% for 1985 - 2004

Indian Market: Bird of Gold Illustration 1: GDP Growth Forecast

Illustration 2: Household Income Growth

Source: McKinsey Global Institute



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Household Consumption would quadruple from INR 17 Trln to INR 70 Trln in 2025.

Urban India – which would be housing 1/3rd of the

country – would account for 2/3rd of growth in consumption of INR 36 Trln in 2025.

Increase in dispensable income by INR 42 Trln

would contribute to 80% of increase in consumption in 2025.

India is today 12th largest consumer market in the

world (equivalent to Brazil), despite having 6 times the population of Brazil.

India would become 5th largest consumer market

in the world with annual consumer spend of US$ 1.5 Trln.

Thus Indian consumer market offers attractive

opportunities for entrepreneurs and investors.

Indian Market: Bird of Gold Illustration 3: Household Consumption

Illustration 4: India – 5th Largest Consumer Market




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Increasing internet penetration and fast growing television market with global broadcasters entering Indian markets, would further provide access to Indian consumers with global brands, sports and sporting events.

CBS Television is now a fresh entrant in Indian

market in partnership with Reliance Anil Dhirubhai Group’s BIG Entertainment.

Global players like STAR and Sony Entertainment

have been active in India for more than a decade Successful launch and penetration of TimesNow and ETNow by Bennett, Coleman and Co Ltd (Publishers of Times of India and The Economic Times) indicates availability of space for stronger and quality players in this space

Indian Media Market: Rising Star Illustration 5: Global Internet Penetration

Illustration 6: Internet Penetration in India

No Country

Penetratio

n (%) Growth (%)

Population

Share (%)

Users Share

(%)

1 China 22.40% 1244.40% 19.80% 18.70%

2 United States 74.70% 138.30% 4.50% 14.20%

3 Japan 73.80% 99.70% 1.90% 5.90%

4 India 7.10% 1520.00% 17.10% 5.10%

5 Brazil 34.40% 1250.20% 2.90% 4.20%

Top 20 Countries 28.60% 342.70% 63.90% 76.80%

Rest of the World 15.30% 324.70% 36.10% 23.20%

Total Worldwide 23.80% 342.20% 100.00% 100.00%

Source: Internet Stats

Source: Internet Stats

Year Users Population Penetration (%)

1998 1,400,000 1,094,870,677 0.1%

1999 2,800,000 1,094,870,677 0.3%

2000 5,500,000 1,094,870,677 0.5%

2001 7,000,000 1,094,870,677 0.6%

2002 16,500,000 1,094,870,677 1.5%

2003 22,500,000 1,094,870,677 2.1%

2004 39,200,000 1,094,870,677 3.6%

2005 50,600,000 1,112,225,812 4.5%

2006 40,000,000 1,112,225,812 3.6%

2007 42,000,000 1,129,667,528 3.7%


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Cricket – which is also the national sport – has been the biggest sport in the country, and dominates sports marketing industry in the country, as per AC Nielsen study.

However, other sports are picking up very fast,

especially due to availability of many channels to broadcast the same.

Rising marketing, advertising and branding spends

is also facilitating commercialization of other sports. According to the Pitch-GroupM Survey, the size of

the sports marketing industry is around INR 19 Bln and is growing at 25% annually.

Nevertheless this industry in India is still at a

nascent stage. Sports marketing is fast becoming a critical media

to connect consumers with brands and increase brand visibility and recognition.

Newer sports are also fast getting increasing

acceptance and proving room for newer sports to get respected space in a fast growing market

Sports Market: Next Wave? Illustration 7: Top Sports

Illustration 8: Football audience increase by 60%

Source: TAM

Source: TAM Urban Class I, AC Neilsen

Sport Mn Viewers

Cricket 122

Wrestling 96

Football 83

Tennis 70

Golf 65

Car/Bike Racing 59

Hockey 35

Basketball 26

Baseball 26

Billiards 19


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Attraction of Non Cricket sports is fast increasing in the country, with large share attributed to football and tennis and then F1.

Advertising spends and brand association with the

same is also rising. Demand for localized content is in demand, and

this offers room for more local sporting events to be organized and televised .

With more sports channels and growing

competition within this space, and only one channel getting cricket rights, every channel would need more attractive and innovative local content – sporting event – to atleast retain market shares.

Advertising spends of all brands on sports

channels is at INR 4.5 bln, out of total TV sponsorship of INR 85 bln, which is a mere 5.3% compared to 16% in USA.

Increasing share of non cricket sports would help

in expanding sports media and sports marketing industry in the country

Growth of Non Cricket Sports Illustration 9: Increasing volumes in Non-Cricket Sports

Illustration 10: Viewership v/s Content Distribution

Source: TAM

Source: TAM


About Paradigm Advisors

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Indian Sports Media Sector Paradigm Advisors is a boutique

corporate finance and strategy advisory firm, based out of Mumbai, India’s financial capital, providing services in capital raising, M&A, corporate strategy, India Entry Strategy, research and investment advisory to Small and Medium Enterprises (SMEs) and mid-market corporates.

Backed by a young and equally

experienced team of investment research, market research, investment banking, investment management, strategy advisory, commercial banking professionals with more than 45 man years of experience in aforementioned lines of services, Paradigm Advisors is well poised to advise its clients.

Contacts

Contacts

Sumeet Mehta, Managing Director Email: [email protected] Mobile: +91 98704 38983

48, Bhupen Chambers, Opp. BSE, Dalal Street, Fort, Mumbai, India, 400 001 URL: www.paradigmgroup.in

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Sports Media Sector Presentation