‘Media houses generate finances quicker than most other industries’

The dotcom boom gave entrepreneurs a taste of big money through venture capitalists. With this in the backdrop, different industries took advantage of venture capitalist funding. The private equities have been an obvious gainer through big investments. The IT and ITES sectors secure about 47 per cent of the entire investing pie (Rs 3,046 crore), whereas media manages a mere 3 per cent which translates to Rs165 crore.

Recognising the potential of good returns from the media industry, ICICI Ventures has been an early investor in this sector but at the same time exercise care in building relationships with them. “One aspect that the media industry needs to concentrate on is establishing a clear difference in the ownership and the management of the firm. One must realise that media houses generate finances quicker than most other industries, hence the patience levels need to be regulated when it comes to results in a more professional environment,” said Bala Deshpande, director, investments, ICICI Ventures.

However, there are several missing links between wanting to invest and actually putting money down. “Size and scalability are important. What needs to be recognised here is that a firm, be it a channel or a content development house, cannot categorise itself in such a manner that it is boxed into a severe format,” she said. Contrary to the myth that specialisation is the key, venture capitalists are in fact looking for a broader perspective--people who can offer something more than soap operas starting with the same letter.

Every firm needs to offer a definite growth potential ensuring predictability of revenues. While most deals cannot be equated with every single rupee, a definitive return should be guaranteed. For this they need to ensure a typical unique selling point. Every media unit needs to distinguish itself from the other, telling us what is new and different about them specifically. Having rehashed corporatisation into institutionalisation, leading a company on the basis of a single CFO doesn’t amount down to the same thing.

“The decision-making process needs to be legitimate and should reflect integrity. While most decisions in a organisation lie in the hands of the CEO’s, there is always a relevant rationale for the end decision taken, and this reasoning needs to be credible,” Deshpande added. Also with time, this entrepreneurial culture needs to translate into professionalism, which leads to better corporate governance.

Along with this, exit options and a visibility structure needs to be also put in place. More often than not, venturing into unknown grounds is not recommended, however when Aaj Tak and ICICI Ventures got together, they were backing Aroon Purie the brand, as opposed to Aaj Tak. It was the confidence in Purie that took the project forward. Meditech and TV 18 were the other ventures where the firm tasted success.

“It is easier for us to look into a project that is entering into uncertain territory and has the firm backing of the has management as opposed to a firm which enters established territory but has a management which is uncertain. We judge projects by their valuation. Promoters are concerned with dilution and investors are concerned with risk return profiles and exit strategies,” Deshpande said.

The ball has been set rolling and the guidelines are in place for a more effective formula of money management. With most concerns now being shared over a profile of media forms seeking investments, it is only a matter of time when we will see more professional firms taking steps forward towards the ever-growing media industry. New formats will always be experimented with, but the trick will lie in convincing power through the backing of a transparent and just management. This established, the money will indeed come rolling in.