How to Start a media production company in Pakistan PDF

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Pre-Feasibility Study Media Production House

Small and Medium Enterprises Development Authority Ministry of Industries & Production Government of Pakistan www.smeda.org.pk

HEAD OFFICE 4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7 [email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICE KPK

REGIONAL OFFICE BALOCHISTAN

3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7 [email protected]

5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 [email protected]

Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 [email protected]

Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 [email protected]

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Pre-Feasibility Study

Production House Company

Table of Contents DISCLAIMER.................................................................................................................. 3 EXECUTIVE SUMMARY ............................................................................................. 4 INTRODUCTION TO SMEDA ..................................................................................... 5 PURPOSE OF THE DOCUMENT ................................................................................ 5 BRIEF DESCRIPTION OF PROJECT ........................................................................ 6 5.1 Project Brief ..................................................................................................................... 6 5.2 Segments Brief ................................................................................................................ 7 5.3 Production Process Steps ................................................................................................ 8 5.4 Installed and Operational Capacities .............................................................................. 9 6 KEY SUCCESS FACTORS ............................................................................................ 9 6.1 Experienced Key Persons .............................................................................................10 6.2 Attractive ambiance of Office ...................................................................................... 10 6.3 Utilizing Latest Equipment ........................................................................................... 10 6.4 Budgets for Parallel Projects ........................................................................................10 6.5 Utilizing Personal Links ............................................................................................... 11 6.6 Go with small Start ........................................................................................................ 11 6.7 Finalizing Star Cast ....................................................................................................... 11 7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT .......................................... 11 7.1 Opportunity Rationale ................................................................................................... 11 7.2 The Industry Scenario ................................................................................................... 12 8 POTENTIAL TARGET CUSTOMERS / MARKETS .............................................. ..............................................14 14 9 PROJECT COST SUMMARY ..................................................................................... 16 9.1 Key Assumptions .......................................................................................................... 16 9.2 Project Economics ......................................................................................................... 16 9.3 Project Financing ........................................................................................................... 17 9.4 Project Cost......................................................................................................................... 17 9.5 Capital Equipment Requirement ....................................................................................... 18 9.6 Office Equipment Requirement......................................................................................... 18 9.7 Human Resource Requirement .......................................................................................... 19 9.8 Utilities and other costs ...................................................................................................... 19 9.9 Revenue Generation ........................................................................................................... 20 10 CONTACT DETAILS ...................................................................................................... 21 10.1 Production House Details ................................................................................................ 21 10.2 Equipment Suppliers ........................................................................................................ 22 11 USEFUL WEB LINKS ..................................................................................................... 23 12 ANNEXURES.................................................................................................................... 24 12.1 Income Statement ............................................................................................................. 24 1 2 3 4 5

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Pre-Feasibility Study Production House Company 12.2 Balance Sheet ................................................................................................................... 25 12.3 Cash Flow Statement .......................................................................................................26 13 KEY ASSUMPTIONS ...................................................................................................... 27 13.1 Financial Assumptions ..................................................................................................... 27 13.2 Capacity Utilization Assumptions ................................................................................... 27 13.3 Economy Related Assumptions ...................................................................................... 27 13.4 Cash Flow Assumptions .................................................................................................. 27

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Media Production House

1 DISCLAIMER This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions, which may differ from case to case. This report has been prepared with the help of students from Institute of Business management (IoBM), Karachi. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision; including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information. For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk

Document Control Document No. Revision Prepared by Revision Date For information

PREF NO. 143 No. 01 SMEDA-Sindh June 2017 Provincial Chief (Sindh) [email protected]

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Pre-Feasibility Study

Media Production House

2 EXECUTIVE SUMMARY A Media Production House is considered as an entity entitled to produce unique stories related to daily lives of common man with an efficient execution in a given period of time. The demand for good entertainment shows has been increased over a period of time. Production House deals with “Telefilms, Sitcoms, Serials and Drama Soaps” broadcasted on TV for different set of audience. The major target audience belongs to age group 15-25 sharing 28% of the population and 34% target audience belong to age group 26-45. As a result of high demand for TV, drama is making more people get involved in drama industry showing family culture, respect, modesty with the element of glamour. Giving a glance to urban population, the majority of the population possesses televisions with access to cable and internet facilities. There are 90+ state and private channels in national and Urdu language providing an opportunity to big or small production houses to offer drama content favorable for this class. The media logic 2016 studies shows that SECB income class and above have higher tendency to watch dramas and 37% population prefers local content. The key success of drama is execution of drama, flawless content and star cast which attracts majority of the audience. The industry is still in a flourishing stage but requires an expertise in this relevant field and tremendous efforts to sustain. As a new player in the market, starters have to focus certain factors and begin innovative initiatives which provide them an edge in the fast growing industry. Production House Company deals in major productions namely Telefilms, Sitcoms, Serials and Drama soaps. The Estimated cost is around Rs. 28,288,775 with fixed investment of Rs. 12,188,000 and working capital Rs. 16,100,775

Given the cost assumptions IRR and payback are 37% and 2 years and 11 months respectively. The most critical considerations or factors for success of the project are: 1. Most significant considerations which include; a) Flawless content and star cast which attracts majority of the audience. b) It is also considered as an edge if production houses have good relations or links in channels. 2. Equally important factors which include; a) Sufficient knowledge of the industry b) Attractive ambience of office c) Utilization of latest shooting & post shooting equipment

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Further this report outlines the general understanding of the production house business key success factors, industry scenario, and company’s relationship with cust omers, channels, and employees and its financials for potential investors.

3 INTRODUCTION TO SMEDA The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral research’ to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.

4 PURPOSE OF THE DOCUMENT The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Media Production House by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The pre-feasibility reports are necessary for professionals of the entertainment industry sector. The research gives them the idea of thumb rules and best practices followed by existing experts that gradually becomes industrial norms which further guides the investors regarding various 5 June 2017

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Media Production House

aspects of business set-up and its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.

5 BRIEF DESCRIPTION OF PROJECT 5.1 Project Brief Media Production House is responsible for the development and filming of a specific production or media broadcast. In entertainment, the production process begins with the development of a specific project. A Production House is considered to produce unique stories related to daily lives of a common man with an efficient execution in a given period of time. The services include;    

Preparation of content and drama scripts after approval from channel Casting of relevant characters as per channel choice Shooting complete project Post shooting activities (editing)

There are various off-shoots of these services which may be used to entail the desired results according to the set objectives. 5.1.1

Technology

The production house needs to stay active by launching best quality drama which has strong story line, remarkable dialogues and proper execution of drama. This thing is only possible with the use of latest and advanced technology equipment such as camera, lighting etc. If the production house fails to produce good quality content, their revenues and market presence starts depreciating with time. 5.1.2 Location Location and layout is very important factor for production house. To find a location for production house there is a list of criteria that the premises should meet: Cost, size and location, Structural condition, Maintenance liabilities, Tenure, Accessibility and parking, Layout, Front elevation, reception appearance, Security, Surroundings and Lighting. Once a location is finalized then the design and layout of the interior should be taken into account.

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5.1.3 Target Market The target market for production houses are the channels that will ultimately broadcast the drama on TV. Moreover for any production house the common household will be on the top of the list who likes quality entertainment for passing their leisure time. 5.1.4 Employment Generation Key personnel should be on payroll like editors, production managers, etc. Further the financial analysis later on shows the detail of employee personnel to be hired on both permanent and contractual basis.

5.2 Segments Brief Production House deals with plays broadcasted on TV for different set of audience. In our report, play segments elaborated includes: 

Telefilm



Sitcoms



Serials



Drama Soaps

Each category is defined as follows; ‘Telefilms’ is a category broadcasted for 70- 90 minutes and is broadcasted occasionally in case of national or religious events and globally celebrated days like mother’s day, father’s day etc. It is a featured film and requires shooting time from 3 days to 5 days. Assumptions for telefilm are mentioned in Table 1; ‘Sitcom’ is a situational comedy category with comical characters and different story line in each episode. It is broadcasted for 30 minutes to 1 hour varying from 1 episode per week to daily shows. Sitcom is such entertainment, having more audience as compare to other production entertainment category. Assumptions for Sitcom are mentioned in Table 1; ‘Drama Serials’ is a drama category which involves 25 episodes and it is broadcasted once in a week. The duration of shooting for serials is 3 days per episode and it is completed within at least 2-3 months. The shooting duration takes maximum 50-75 days depending upon the project. After completion of shooting the serial is set for on air. Assumptions for Drama Serial are mentioned in Table 1;

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Media Production House

‘Drama Soaps’ is a drama category which involves 100-200 episodes depending upon the Television Rating Points (TRP) and at least 30 minutes slot for five days in a week including 12 minutes advertisement slot per episode. The duration of shooting for drama soaps may take from minimum 6-7 months to complete 100 episodes. Once 20-25 episodes are completed, the drama is set on air and at the same time shooting of further episodes is also in progress. Assumptions for Drama Soap are mentioned in Table 1;

Variables

Units

Episode Shooting Editing Star Cast Supporting Cast Junior Cast Locations (Upper class) Locations (Lower class) Content Writer Director DOP Line Producer Assistant Director Equipment: Camera ENG staff

Nos. Days Days Nos. Nos. Nos. Nos. Nos. Nos. Nos. Nos. Nos. Nos. Nos. Lot

Variables Assumptions Telefilm Sitcoms 1 4 7 2 2 3 2 1 1 1 1 1 1 2 1

13 3 3 3 2 2 1 1 1 1 1 1 1 2 2

Drama Serials 25 2 3 3 5 5 3 3 1 1 1 1 1 3 2

Drama Soap 100 2 3 3 5 5 3 3 1 1 1 1 1 3 2

Table 1- Variables Assumptions

5.3 Production Process Steps Following are the steps involved in making a single project for any Production House Company; 1. Formation of Idea and its scripting 2. Planning and Budget allocation 3. Sharing one liner/summary idea and available budget details with channels through personal contacts. 4. Acceptance from any channel lead to formation of contract between both Production House and Channel

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5. Contract includes details of Project Price, Casting, Payment Terms and some other requirements. 6. Shoot locations are decided, after finalization of casting and finalizing of project team as mentioned above in step 2. 7. In case of big project such as soap. After completion of 20 to 25 episode shoots, soap is ready to be ON AIR and provided to channel for broadcasting. 8. Shoot include (shooting and its complete editing) 9. As per contract payment terms, production house will receive their partial first payment from channel on 20 to 25 episode handover. 10. Each episode shoot and its editing take around 4 to 5 days working. 11. The shooting and other activities continues till the end of the project.

5.4 Installed and Operational Capacities It is recommended for a new production house business, it should be started with a single project of telefilm in beginning. Gradually it can strengthen its company by earning good reputation in media industry and gain audience’s attention. There are companies dealing in full-fledged drama soaps and serial production along with earning good profit margi...