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Expansion in Media and Entertainment Industry through Merger and Acquisition

Merger and acquisitions are transactions in which the ownership of companies and various business organizations or their operating units are transferred or consolidated with other entities. It is the way of surviving the ever changing market to help a business to proceed towards a new diverse level and like any other industry, the Television and the Entertainment industry is observing Merger and acquisitions.

The price of running a media company is a big budget operation which includes distribution and maintaining a continuous flow of new and ever changing content. Various channels and streaming services with high budget would take such opportunities to diversify and expand to earn huge amounts of profits.

The Indian Media and entertainment (M&E) industry is a booming sector for our economy and is making noticeable progress in proving its importance to the world as it moves forward in show its rising consumer demands in the business. Currently the Indian media and entertainment sector ranks 5th in the world media market and has reached 1.82 trillion rupees in the year 2019 which is considered as a 9 percent growth. The Federation of Indian Chambers of Commerce and Industry states in its report this as the Era of Consumer A.R.T Acquisition Retention and Transaction.

The primary focus of several production and media companies is to develop content which is diverse in nature as our country is culturally and racially diverse. The Indian content in the same time is globally popular and is often dubbed with various foreign languages and hence capture a wide range of audience worldwide. Hence leading the media and entertainment sector towards worldwide expansion.

Viewers are often drawn towards new trends and shows which lead parent companies and investors to look for new trends and popular cultures. This constant need of new content and trends requires instant available entertainment and to tackle never ending need led to the emergence of streaming services like 'Hotstar', 'Voot', and 'Sony Liv'.

It is to be known that the key objective of merging or acquiring is the diversification of companies' profile which would help it to grow and establish new technologies and gaining more number of subscribers.

In recent years, the media and entertainment industry has observed a total of 21 mergers and acquisitions (M&A) which summed up to US$240 million. The online streaming services in India are estimated to reach US$ 4 billion by the year 2025, with various subscription services which will lead up to contribute more than US$ 1.5 billion. The media and entertainment market will grow at a compound annual growth rate (CAGR) of 13.5% during the financial year 2019-2024. It is expected to reach around rupees 3.1 lakh crore by 2024.

Which made companies like Tiger Global Management LLC end up acquiring 25% stake in the online streaming service known as TVF'(The Viral Fever) hence establishing an Era of the Internet. As of January 2019 Zee studios launched a digital platform in order to produce premium content and create brand new intellectual properties for all digital platform. Also Bharti Airtel's direct to home (DTH) arm Airtel Digital TV and Dish TV merged by end of August 2019, and this year 2020, Hotstar, owned by the Star Network was remodelled as 'Disney+Hotstar', through which they plan to provide all Disney+ shows and cinemas by adding regional subtitles and dubbing them.

Music platforms such as Spotify has planned to launch a version of itself known as Spotify lite for low-cost android phones in India in order to gain more number of subscribers and also made a strategic acquisition of a podcast platform known as The Ringer in order to acquire its huge number of premium subscribers.

The Media and Entertainment Industry is witnessing an exceptional growth at this time. The rise will continue through various mergers and acquisitions made by media companies as they want to expand and diversify themselves along with their ever changing and evolving consumers. The Indian Media and Entertainment sector is currently expected to grow at a much faster pace than the global average rate because of its increasing subscribers and their want of ultra modern and pristine content continuously at the tip of their fingers.

Written By: Amrita Ghosh (KIIT School Of Law) 4th Year

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