Companies in the media and entertainment business should learn and adopt partnership models from the telecom sector to tide over the ongoing impact of the financial crisis, mooted an Assocham-Ernst and Young combined report released on Monday.
Like telecom companies, media firms should outsource information technology systems to a professional service provider to reduce costs.
Also, competitors should now look at joining hands to derive benefits of economies of scale to enhance profits. Just as in the telecom industry where competitors like Bharti Airtel, Vodafone-Esssar and Idea Cellular have pooled in passive infrastructure towers under a common company thereby freeing up costly capital and enhancing efficiencies, media companies, at least of national and regional scale, should tie up to increase efficiencies.
For instance, regional radio companies could explore opportunities with national radio players to utilise their marketing abilities. Cross media content-sharing arrangement of various types can be explored and similar tie-ups within the same sub-sector should also be looked into. For instance, national news channels could tie up with regional ones for live feeds during election or other important local events.
Some of this, however, is already happening - a national business daily has already entered into a content-sharing arrangementÂ a TV channel.Â
In the next 12 to 18 months, companies in the media and entertainment sub-sectors should explore leveraging international outsourcing opportunities arising out of global financial crisis that has hit other parts of the world more severely.
Indian companies could look at more aggressively catering to MNCs in the area of publishing, animation, post production and gaming outsourcing, sectors wherein India is already competent to offer huge cost advantages compared to their counterparts in the US or Europe. Companies should target at servicing global companies who are actively seeking cost-cutting measures across the value chain.
In the event of content acquisition being so cost prohibitive, broadcasting companies may share risks or acquire part stake in production houses or generate content in house.
"Till the liquidity crunch hit us, the mantra in the media industry was on 'growth', which has now changed to 'profitable growth'. It is now advisable for companies to hold cash to buy assets cheap in a recessionary market."
"Companies could increasingly look at the regional markets and customised content for their expansion plan and markets that still remain untapped," said Farokh Balsara, national sector leader, media and entertainment, Ernst and Young.
Companies in an attempt to optimise tax costs will nowÂ review tax status to enhance supply chain efficiencies, explore debt restructuring opportunities, reduce foreign tax burden, maximise tax credits or refunds
6 months ago