Reed Elsevier IndusView Indian Media Market Overview

INDIA
The World’s 2nd Fastest Growing Media Market
Presentation to
Reed Elsevier Plc
Barcelona, Sept. 28th 2006
IndusView Advisors Pvt. Ltd

www.indusview.com
New Delhi, Mumbai, Boston, London
September 2006
© Private and Confidential, IndusView 2006

TABLE OF CONTENTS
1. The India Growth Story
2. The Indian Media Industry – A Snapshot
3. Print Media Market Overview
4. Investor Interest in Media Sector
5. Foreign Investment and Partnerships
2
The India Growth Story
The Indian Media Industry – A Snapshot
The Print Media Market Overview
Investor Interest in Media Sector
Foreign Investment and Partnerships
3
INDIA’S FAST GROWING ECONOMY
India’s GDP Relative to Other Asian Economies

12%
Growth Stats
9.9%
10%
GDP Growth 8.4%
GDP Growth Rate (%)

8.4%
GDP $801 billion
8% 7.3% 7.5%
Inflation 4.2%
Exports $89.3 billion 6.1%
6% 5.6% 5.5%
Imports $128.4 billion
Foreign Reserves $153.6 billion 4.5%
4.1%
Population 1.1 billion 4%
Consumer Class 300 million
2%
Sources: Economist Intelligence Unit; National Statistics;
Thomson Datastream; 2005-2006 Year Figures 0%
Hong Kong
Indonesia
China
India
Korea
Singapore
Thailand
Philipines
Taiwan
India - the fourth largest economy in
terms of purchasing power parity
Source: Economywatch
4
GROWTH FACTS
• 70% Population under 35 Years of Age Projected $ GDP Development (Indexed*)

(International Herald Tribune, Jan. 26, 2006)
• Fastest Growing Mobile Phone Market at
5.9 million new units in August 2006
(EMC and Telecom Regulatory Authority of India,Sep.14, 2006 )
• Fastest Growing Aviation Market at 25%
per year and a $31 billion order book
(Aviation and Travel Industry News)
• Top Remittance Market at $21.7 Billion

(World Bank Global Economic Prospects Report 2006)
• Top Movie Maker - 1,200 films Grossing
$1.5 Billion in 2005
2031
2013
2015
2017
2005
2033
2001
2003
2007
2009
2011
2019
2021
2023
2025
2027
2029
2035
(KPMG India Media Report, 2006)
• 2nd Fastest Growing Economy with 9.3%
GDP Growth for Quarter Ending Mar. ‘06
(Indian Government Central Statistical Organization) India China G6
Source: Dreaming with BRICs: The Path to 2050, Goldman Sachs, Oct 2003; 2003 is Base Year
(100)
Poised to Be 3rd Largest Economy by

(Deutsche Bank Report, 2005) 2032 from 12th Wealthiest in 2005
5
THE INDIA ADVANTAGE
• Expanding Indian Economy 30

Projected Growth Rate of the E&M Industry
• Rising ad-spend – contributes 0.40% of 25

GDP, risen from 0.34% in 2004
20
Percentage
• Literate population on the rise
15
• Strong job creation in new economy sector
10
• Change in consumer mindset due to global
5
exposure
0
• Untapped rural potential 2007 2008 2009
• Relaxation of foreign investment and China India Asia Pecific USA UK
foreign ownership limits Source: PwC’s Global Entertainment & Media Outlook 2005-09
Source: Times Of India, PwC
The world is waking up to the opportunity that is India
6
Print Media Market Overview
7
INDIA’S 6TH FASTEST GROWING SECTOR
• The Indian Entertainment and Media (E&M)

Rising
Industry has out-performed the Indian percentage Increase in Changing
age of income spending
economy and is one of the fastest growing young levels patterns
sectors in India population
• The industry is expected to more than

double to $18.6 billion in 2010 from $7.8 Consumerisation of Urban
billion in 2005 India
• Rising consumer spending (increasing

disposable incomes) on account of
sustained growth in income levels and Increase in
Increase in Rising
number of
spending aspiration
reduction of personal income tax over the working
powers levels
urban
last decade
Consumption of Lifestyle
Items
Source: FICCI and PwC
The entertainment and media industry in India is expected

to grow faster than the country’s GDP (9.3%) growth
8
MEDIA INDUSTRY– A SNAPSHOT
CURRENT MARKET SIZE
Press Books Online Broadcast

Press Readers in 2005 Book Readers in 2005 Internet Users in 2005 Television
- 216 Million - 600 Million - 50 Million Number of households
(5% of population) covered
Magazines Market size in 2005 - Grew at 25% over - 100 Million (50%)
Market size in 2005 - $685 Million 2004
- $250 Million Films
Fragmented Industry Market size of Online Number of Films released
Newspapers - 16,000 publishers Transactions in 2005 in 2005
Market size in 2005 - $262 Million - 1200
- $2500 Million - Rising literacy & - Books & Magazines - 3 Billion Tickets sold
education standards account for most online in 2004
Recepient of 46% of are increasing demand shopping
Advertising-Spends in 2004 - Off-shoring of Radio
publishing is an Market size of Online - Recently opened to
- Preferred source of emerging area Advertising Private Investment
Content in India - $24 Million
- Demand rising with Receipient of 48% of
rising literacy Advertising Spends in
2004
Source: India Brand Equity Foundation
9
MEDIA INDUSTRY– GROWTH PROSPECTS
SCOPE FOR GROWTH
Press Books Online Broadcast

Magazines Growth in this segment is Growth is expected to Growth is expected to
Market to grow at 6% expected to come from: come from: come from:
annually
- Increasing Online transactions which Television
Newspapers readership have been growing - Direct To Home
Market estimated to grow at with literacy and around 80% per annum - Increasing TV sales
6% annually for next 5 years education
Online advertising is Films
Demand to increase with - Exports resulting expected to grow at 50% Digitalization of Screens in
increasing literacy and need from Off-shoring of CAGR Smaller cities
for information publishing which is
expected to gain a Growth is expected to ride
size of $1.1 Billion rising internet connectivity Radio
by 2009 - Demand for regional
and local content
Source: India Brand Equity Foundation
10
11
GROWING NUMBER OF READERS
• Total readership grew by 7 million during the Readership-Newspaper and Magazine

250
last year to 222 million at the beginning of 222
215
2006 – a growth of almost 3% over 2005 204
200 191
• The average urban adult spends 44 minutes
# in million
per day reading dailies and magazines – an 150
increase of 7% over last year
• The literacy rate has risen to 71.1% from 100
75 68
69.9% the last year. The rate of growth has
50
been marginally more in rural areas (64.8%
from 63.3%) than in urban areas (85.3% from 0
84.4%) 2005 2006
Newspaper Magazine Total
Source: NRS 2006
With the literate population on the rise, more people in rural

and urban areas are reading newspapers and magazines
12
MAGAZINE SUBSCRIPTIONS EXPANDING
Total Magazine Industy Revenue

• The magazine publishing market 350
revenues are expected to grow at 6%
compounded annually 300
79
• The relaxation of the Foreign Direct 250 75
77
Investment limits for investment in the 73
US$ million
71
200
Indian print media market is opening a
plethora of opportunities 150
223 236
100 196 210
183
50
0
2005 E 2006 F 2007 F 2008 F 2009 F
Advertisements Subscriptions
Source: Industry Estimates and PwC Analysis
Government now allows the printing of facsimile editions

of international newspapers and journals in India
14
NEWSPAPER CIRCULATION INCREASING
• The newspaper publishing market in India Total Newspaper Industry Revenue
comprises of spending by advertisers and 3,500
readers on daily print newspapers 3,000

• India's newspaper market is estimated to
2,500
US$ million
grow at a compound annual rate of 6% 1,848
1,763
between 2005 and 2009 2,000 1,680
1,599
1,520
• India’s growth rate in this segment is 1,500
expected to be much higher than the
1,000
average rate of growth in the Asia-Pacific
1,160 1,242 1,323
region in the next four years 500 1,004 1,081
0
2005 E 2006 F 2007 F 2008 F 2009 F
Advertisements Subscriptions
Source: Industry Estimates and PwC
India - the 2nd largest market for newspaper circulation

Source: World Press Trend 2006
15
PUBLICATION GENRE BREAKDOWN
Magazines
Newspapers
Others 2% Youth 0.03%
Film 5%
Information
0.04%
Information Technology
6%
Technology
Business 9%
Business 9%
Women's
21%
Magazine
General Interest 35% General Interest 91%
0% 5% 10% 15% 20% 25% 30% 35% 40%

0% 20% 40% 60% 80% 100%
• ‘General Interest’ genre played a major role in Print advertising during the 1st half of 2006 with 91%
share in Newspapers and 35% in Magazines
• Business Newspapers were in second place with 9% share, while Women’s Magazines carried 21%
share followed by 9% share of Business Magazines
Source: AdEx India
Diverse interests of people boosting sales of magazines and newspapers

16
ROBUST BOOK MARKET
• India ranks 3rd in the publication of English books after the USA and the UK
• More than 77,000 new titles are published each year, of which 30,000 are in English
• There are approximately 600 million readers of books in India
• India is the only country in the world, which publishes books in 30 languages
• There are approximately 16,000 publishers in the country
• Indian book publishing industry is estimated to be worth $685 million
Source: Indiaguest
Indian book market growing global
17
E-COMMERCE FUELED BY ONLINE BOOK SALES
Transaction Value Avg. Number of Transactions Per Month

600
900,000
511 795,000
500 800,000
700,000
400
600,000
US$ million
300 500,000 440,000

262
400,000
200 300,000
127 207,000
200,000
100 57
100,000
0 0
2003-04 2004-05 2005-06 2006-07E 2003-04 2004-05 2005-06
Source: IAMAI Source: IOAI
• Average transaction value for the year 2005-06 was $25

• Average number of transactions grew by 80% in 2004-05 and nearly quadrupled in 2003-04
Books account for 41% of total online shopping

Magazines account for 19% of total online shopping
18
INTERNET TO LOG THE FASTEST GROWTH BY 2010
Online Advertising Market In India Internet Growth in India

60.0 60 5%
50.0 48
50
4%
Internet Users (Millions)

40.0 36 40
US$ million
3%
30.0 30
24
2%
20.0 20
9.3 1%
10.0 10
0.0 0 0%
2004 2005 E 2006 F 2007 F 1998 1999 2000 2001 2002 2003 2004 2005
Internet Users Percentage Penetration
Source: IAMAI
Source: ITU, C.I. Almanac
• Out of the media segments, internet advertising will grow at a robust CAGR of 50%
• Revenue of internet advertising is expected to grow to $167 million by 2010
Source: FICCI
Online media open to 100% foreign ownership

19
PRINT MEDIA ON A GROWTH PATH
Total Print Media Industry Revenue

• The Indian Print Media segment 4,000
primarily comprises of Newspaper and 3,500
315
Magazine publishing 300
3,000 285
• Print media revenues are expected to 254
269
US$ million
2,500
grow to $4.3 billion by 2010 - a CAGR
of 12% 2,000
1,500 3,005 3,171

Source: FICCI and PwC 2,680 2,840
2,524
1,000
500
0
2005 E 2006 F 2007 F 2008 F 2009 F
Newspaper Magazine
Source: Industry Estimates and PwC Analysis
A booming Indian economy, growing need for content and government initiatives that
have opened up the sector to foreign investment are driving growth in the print media
20
PRINT MEDIA ATTRACTS 2ND HIGHEST AD-SPEND
• Print contributed 35% to overall advertising

volume in 1st half of 2006
• Print ad-volume grew by 18% in Jan-Jun 2006
over Jan-Jun 2005
• ‘Education’ emerged as the Top super category
in Print advertising in Jan –Jun ’06
• ‘Services’ got the 2nd position and it includes
Properties/Real Estate, Internet/SMS services,
Travel & Tourism, Airlines, Courier Services, etc.
Top 10 Categories In Print Advertising In The 1st Half of 2006

Rank Categories Rank Categories
1 Education 6 Corporate/Brand Image
2 Services 7 Retail
3 Banking/Finance/Investment 8 Telecom/Internet Service Providers
4 Auto 9 Computers
5 Durables 10 Personal Accessories
India is emerging as a promising market for new publications

given its growing role in international business
Source: AdEx India
21
EXPANDING OFF-SHORE BUSINESS
• An emerging area in the Indian publishing industry is the off-shore production of books,
magazines and digital content
• Revenues from off-shoring of publishing vertical estimated to reach $1.1 billion by 2010 from
$107 million in 2005
• India exports books and journals worth $102 million to more than 80 countries
• Recent legislative changes have opened up new opportunities in the publishing industry for
foreign companies. 100% Foreign ownership is permitted in the non-news sector and in
trading companies engaged in publishing industry
Source: Indiaguest
The Indian publishers are looking to expand their

market though both organic and inorganic routes
22
KEY PLAYERS
MAINLINES READERSHIP
1.1 Dainik Jagran (Hindi) 21.2 million
1.2 Dainik Bhaskar (Hindi) 21.0 million
1.3 Times Of India 7.4 million
1.4 The Hindu 4.5 million
1.5 Hindustan Times 3.85 million
BUSINESS DAILIES READERSHIP
2.1 The Economic Times 0.86 million
2.2 Hindu Business Line 0.17 million
2.3 Financial Express 0.09 million
BUSINESS MAGAZINES READERSHIP
3.1 India Today (English) 5.15 million
3.2 Business World 0.68 million
3.3 Business Today 0.71 million
3.4 Business India 0.52 million
Source: NRS
There are a large number of players in this segment,
spanning various genres, regions and languages
23
24
TOP PUBLICLY LISTED MEDIA FIRMS
Revenue Net Profit Margin Market Cap P/E

Firms ($ Million) (%) ($ Million) Ratio
Reported Results for the Quarter Ending June 2006
Magazines and Newspapers
1. HT Media Ltd. 51.98 12.80% 595.00 32.04
2. Deccan Chronicle Holdings Ltd. 23.83 21.20% 445.00 29.98
3. Jagran Prakashan Ltd. 29.71 16.70% 324.00 46.53
Books
1. MacMillan India Ltd. 8.57 21.40% 143.00 15.30
2. Navneet Publications Ltd. 37.76 19.60% 140.00 N/A
Broadcast
1. Zee Telefilms Ltd. 50.03 6.70% 2896.00 171.89
2. Sun TV Ltd. 19.44 47.20% 1949.00 66.36
3. New Delhi Television Ltd. 11.83 0.84% 280.00 N/A
4. Television Eighteen India Ltd. 6.97 69.00% 270.00 64.81
5. Balaji Telefilms Ltd. 15.99 23.90% 194.00 15.07
6. UTV Software Ltd. 9.36 0.00% 78.00 120.00
7. Adlab Films Ltd. 11.10 23.60% 332.00 55.59
Source: www.icicidirect.com
Media stocks trade at much higher P/E multiples than the broader market (P/E~18),
which represents considerable investor interest and risk appetite for the sector.
25
26
FOREIGN DIRECT INVESTMENT POLICY
• As much as 100% is permitted in the publishing and printing of scientific and

technical magazines, periodicals and journals
• In the news and current affairs category, for instance newspapers, Foreign
Direct Investment has been allowed upto 26% subject to certain conditions:
o The largest shareholder must hold at least 51% equity
o Three-fourth (3/4) of directors and all executive and editorial staff have to
be resident Indians
Source: PricewaterhouseCoopers research
The Government of India has been constantly easing the foreign direct investment norms
thereby making entry of foreign players easier and more welcome in this sector
27
MORE FOREIGN COLLABORATIONS WITH INDIAN MEDIA
Some of the important collaborations:
Indian Entity Foreign Entity

Business Standard Financial Times (Pearson Group)
Jagran Prakashan Independent News and Media, UK
Mid Day Multimedia T Rowe Price International
HT Media AMP Hendersen, UK
Tata McGraw Hill, New York
Times Of India BBC Worldwide,UK
CyberMedia SX2 Media Labs LLC, New York
McGraw Hill, New York
Kaleidoscope Entertainment
Infomedia India Limited Wisden Group, UK
Ringier Trade Publishing, China
Vogel Group, Germany
Foreign Publishers are entering the Indian market

via Investments, Joint Ventures and Alliances
28
CONTACT DETAILS
Bundeep Singh Rangar
Chairman, IndusView UK
Tel +44 20 7724 0777
Fax +44 7092 007 100
Bundeep.Rangar@IndusView.com
Thank You
29

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INDIA

The World’s 2nd Fastest Growing Media Market

IndusView Advisors Pvt. Ltd

© Private and Confidential, IndusView 2006

1. The India Growth Story

2. The Indian Media Industry – A Snapshot

3. Print Media Market Overview

4. Investor Interest in Media Sector

5. Foreign Investment and Partnerships

The Indian Media Industry – A Snapshot

The Print Media Market Overview

Investor Interest in Media Sector

Foreign Investment and Partnerships

India’s GDP Relative to Other Asian Economies

GDP Growth Rate (%)

• 70% Population under 35 Years of Age Projected $ GDP Development (Indexed*)

• Top Remittance Market at $21.7 Billion

Poised to Be 3rd Largest Economy by

• Expanding Indian Economy 30

• Rising ad-spend – contributes 0.40% of 25

• Relaxation of foreign investment and China India Asia Pecific USA UK

Source: Times Of India, PwC

The world is waking up to the opportunity that is India

The Indian Media Industry – A Snapshot

Print Media Market Overview

Investor Interest in Media Sector

Foreign Investment and Partnerships

• The Indian Entertainment and Media (E&M)

• The industry is expected to more than

• Rising consumer spending (increasing

Source: FICCI and PwC

The entertainment and media industry in India is expected

CURRENT MARKET SIZE

Press Books Online Broadcast

Source: India Brand Equity Foundation

SCOPE FOR GROWTH

Press Books Online Broadcast

Source: India Brand Equity Foundation

The Indian Media Industry – A Snapshot

Print Media Market Overview

Investor Interest in Media Sector

Foreign Investment and Partnerships

• Total readership grew by 7 million during the Readership-Newspaper and Magazine

Source: NRS 2006

With the literate population on the rise, more people in rural

Total Magazine Industy Revenue

Source: Industry Estimates and PwC Analysis

Government now allows the printing of facsimile editions

• The newspaper publishing market in India Total Newspaper Industry Revenue

comprises of spending by advertisers and 3,500

readers on daily print newspapers 3,000

Source: Industry Estimates and PwC

India - the 2nd largest market for newspaper circulation

Others 2% Youth 0.03%

General Interest 35% General Interest 91%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Diverse interests of people boosting sales of magazines and newspapers

• There are approximately 600 million readers of books in India

• There are approximately 16,000 publishers in the country

• Indian book publishing industry is estimated to be worth $685 million

Indian book market growing global

Transaction Value Avg. Number of Transactions Per Month

300 500,000 440,000