The Western world’s media industry is losing viewers. The pie is being cut into increasingly small slices of niche viewers that are often mixing it up with YouTube thought leaders, or niche content on social media apps like Twitch. Only around a third of those under 30 subscribe to the New York Times. At least 50% of Fox and MSNBC nightly viewers are over 50.
In the U.S., some podcasting talk show stars like Joe Rogan have more viewers than highly paid CNN staffers like Don Lemon. With that in mind, why would anyone want to invest in the media landscape? Surely, what’s happening in the U.S., will one day come to Brazil and India next.
But an ex-BBC Russia Exec, Wesley Dodd, isn’t scared. (Granted, if you can survive two years as a British newshound in Russia, you probably have nerves of steel, skin like Teflon.) There’s a reason for it, though. The shrinking cost structure and the general implosion of big media has created an opportunity for his now 7-year-old firm Celebro. In short, they are a studio outsourcer, content creator on the news side, and is generally there to be the temporary on-demand studio for local news outlets, and other media firms grappling with weaker revenues, and in some cases, disappearing viewers.
Celebro recently opened studios in New York, Miami and are now going after Las Vegas and Silicon Valley.
The real growth is in emerging market media. They, too, will be facing a downsizing frenzy in the years ahead.
“We have our sights set on 100 TV companies who we had identified as clients in Latin America, India and the Middle East,” says Dodd. The new roll out will open studios in Mexico City, Rio, Buenos Aires and Bogotá in early 2022, then Delhi, Mumbai and Karachi in Summer 2022. Their only emerging market now is Russia. In London, Moscow, and now in the United States, they work mainly with Fox, BBC, CNN, Al Jazeera and CGTN. They also sell breaking news spots to around 20 National Broadcasters like Caracol Columbia.
All of this is a little different from the aching global news media market, though. Their pie is rather ‘meh’, but the pie the likes of Celebro is baking is a little sweeter, bigger, and growing.
The TV broadcast services market, which is where Celebro operates, is growing. The global television services market size is expected to reach $499.8 million in the next five years, with at a growth rate of 5.4% from 2021 to 2027, according to a report published this month by Allied Market Research. For comparison, the global broadcast media market is seen growing at a compound annual growth rate of 2.4%.
It’s Better in India
The reason every corporate (and portfolio) investor loves emerging markets is growth rates. Europe is a dinosaur. The U.S. is still interesting, especially for those servicing already existing media empires. India is forever expanding.
In 2024, television will make up 40% of the Indian media industry, 13% by print media, which is mostly the big daily newspapers. By 2024, India’s combined news and entertainment media industry is expected to reach $39 billion with a compound annual growth rate over the next three years of 9%, double the industry average for broadcast media service. This is not exactly comparing apples to apples. More like comparing granny smith apples to red delicious. It’s a close indicator of market demand, and India is where it is at.
India holds the most potential of any market in the world and its rate of growth will see total streaming video revenue overtake that of South Korea, Germany and Australia to become the 6th largest market for the likes of Indian Joe Rogan’s and Twitch rockstar gamers looking for studio space as they outgrow their home studio over the next three years, thinks Invest India, an Indian government investment promotion authority.
Mexico: Big Media, Big Government, Big Billionaires
Based on data compiled by Statista, the mass broadcast media sector as share of gross domestic product in Mexico has been in freefall between 2007 and 2019. Yet, the value of news and entertainment broadcast media market is expected to rise over the next three years, though not as fast as India’s.
Mexico’s Big Media isn’t going broke. It’s owned by the country’s oligarchs, and they survive on government ads. The medium sized ones, however, do not. They’re the target of companies like Celebro. Forbes billionaires Carlos Slim Helú (UnoTV), Ricardo Salinas Pliego (TV Azteca) and Emilio Azcárraga Jean (Televisa) might even become clients if they want to save a peso.
Further south, Brazil’s media market is similar. It is dominated by three news channels, led by Globo, which is in the middle of waging a war against the government for cutting its advertising and other spending. It is unclear if Globo is really in trouble due to its near-monopoly status, but Brazil’s media landscape is rich and it will trend along with the United States faster than Mexico does in terms of outsourcing news staff, studio space, and the growth of social media influencers also looking for studio space as a niche segment for broadcast service firms.
The value of the news and entertainment market in Brazil from 2014 to 2023 has been on a steady rise, similar to that of Mexico, according to Statista. Over the last 8 years ending 2018, growth of new news players has flatlined. Ad spending collapsed last year by nearly half for magazines and newspapers, and was kept alive by government and medical ads in 2020. It is unclear what kind of cost cutting will come of this, but that kind of headwind for newsrooms and content creators in general is a market for Celebro.
“We don’t feel that local broadcasters are our target market,” says Dodd. “Many of the big state or national broadcasters are slimming down, buying our services by the day or the hour is much more cost effective than running their own bureau now,” he says. “This is particular true of the Latin American market who need and want a presence in cities like Miami or Mexico City but don’t want the hassle of running a bureau. Because we ‘pool’ the resources in each location- the cost of a cameraman for a day is peanuts compared to a full-time staff cameraman.
First Channel in Russia do not have a studio in D.C from which to make a full show, but they can buy an hour In Celebro’s multi-million-dollar studio in D.C. This really allows ‘smaller‘ channels to punch above their weight,” Dodd says.
For Celebro, currently in expansion mode in the U.S. this year, the best markets are those where nations are looking to expand their content, national stories, or their government’s soft power overseas.
“A glossy TV channel is the ‘must have’ for an emerging nation,” says Dodd. “We allow a news channel to show that they have a point of presence in multiple key cities – a bureau with their own reporters but using Celebro facilities. Remember that in some countries there will be more than one such channel. Look how much comes out the Gulf nations today,” he says.
Back in the U.S., more bad news for the traditional news and entertainment business anyway (virtual reality and gaming are going bonkers): subscription TV revenue of $94.2 billion in 2019 will continue to contract by around 3% a year for the next three years, PwC said in a report.
“The amount of news content globally is still growing,” says Dodd. “We are seeing the emerging markets wanting to have their own BBC/RT/CNN. It’s a way of projecting their muscle abroad, and we are here to help.”