Telecom vs. TV Broadcasting

By Ramesh Akkineni
from an article by Vanita Kohli-Khandekar in Businessworld

Television broadcasting has been forever lumped with telecom and IT, in media coverage and by investment bankers. How does it compare with them? Take telecom. According to BW estimates, over the 12 years of its life, private TV broadcasting has raised about $1 billion in equity capital. That is just about equal to the equity investment in telecom. On penetration, television looks good with 80 million homes against the 67 million mobile-plus-landlines. Just like private broadcasters reach 42 million TV homes, private telecom operators reach about 25 million-30 million people. To their credit, mobile phones reached those numbers in eight years against the 12 years that TV took. However, unlike telecom, broadcasting makes money. There are two reasons for this. One, regulation, TV broadcasters did not have to pay licence fees like telecom firms, thanks to the Supreme Court's 'air waves are free' decision of 1995. In fact, broadcasting has seen little regulation till recently. Two, it has had far more 'revenue flexibility' than telecom. Even though more than half of the money in the business comes from pay, the fact is that all private broadcasters are propped up on advertising revenues. As pay TV revenues start looking more real, investor interest in the sector is coming back.

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