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Media Production House Rs. 28.28 Million Jun-2017
Media Production House Rs. 28.28 Million Jun-2017
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
helpdesk@smeda.org.pk
3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
June 2017
Pre-Feasibility Study Production House Company
Table of Contents
1 DISCLAIMER.................................................................................................................. 3
2 EXECUTIVE SUMMARY ............................................................................................. 4
3 INTRODUCTION TO SMEDA ..................................................................................... 5
4 PURPOSE OF THE DOCUMENT ................................................................................ 5
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
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
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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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Pre-Feasibility Study 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. PREF NO. 143
Revision No. 01
Prepared by SMEDA-Sindh
Revision Date June 2017
Provincial Chief (Sindh)
For information
mkumar@smeda.org.pk
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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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Pre-Feasibility Study Media Production House
Further this report outlines the general understanding of the production house business key
success factors, industry scenario, and company’s relationship with customers, 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.
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
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Pre-Feasibility Study 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.
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;
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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Pre-Feasibility Study Media Production House
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
‘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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Pre-Feasibility Study 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 Assumptions
Variables Units Telefilm Sitcoms Drama Serials Drama
Soap
Episode Nos. 1 13 25 100
Shooting Days 4 3 2 2
Editing Days 7 3 3 3
Star Cast Nos. 2 3 3 3
Supporting Cast Nos. 2 2 5 5
Junior Cast Nos. 3 2 5 5
Locations (Upper class) Nos. 2 1 3 3
Locations (Lower class) Nos. 1 1 3 3
Content Writer Nos. 1 1 1 1
Director Nos. 1 1 1 1
DOP Nos. 1 1 1 1
Line Producer Nos. 1 1 1 1
Assistant Director Nos. 1 1 1 1
Equipment: Camera Nos. 2 2 3 3
ENG staff Lot 1 2 2 2
Table 1- Variables Assumptions
Following are the steps involved in making a single project for any Production House Company;
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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Pre-Feasibility Study Media Production House
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.
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.
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 margins as they have matured in this
field but a newly formed company faces barriers as lack of contacts in media industry and
absence of strong drama portfolio. An active production house runs in proper fashion once they
are able to establish a strong portfolio of various telefilms, soaps and serials.
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Pre-Feasibility Study Media Production House
4. Should have minimum three projects in hand for starting a production house. It is
preferred to begin with Sitcoms and telefilms.
5. Should have good contacts with media groups to get their project easily approved.
7. Should finalize renowned star cast at early stage of production for the approval from
channels.
A production house should have a team of experienced and skillful personnel. Specifically in the
area of Script Writer and Production Manager who have sufficient experience and knowledge to
run production house. In that case, production house need to keep such key person on payroll
instead of contractual basis.
One of the key ingredient for bringing investors or venture capitalist interest in production house
is through good ambiance of Production house office. This will give professional impression on
people visiting first time. They would admire by surrounding of office and love to work in such
environment.
Producing any project successfully require not only the idea or the theme of the project but also
the equipment used for the shooting and post shooting activities. Such equipment should be of
high quality and latest version. For this, production house can rent such equipment or the best
option is to invest and purchase such latest model equipment to enhance their production quality.
The most important and essential way of running a successful production house is handling their
budget carefully and smartly both at the same time. In this case, Production house do not need to
wait for the previous payments at the cost of wasting time to produce new projects. They should
start one project keeping the budget for the next one at the same time. In this way, production
house can execute consecutive projects one after the other. However, they would be receiving
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Pre-Feasibility Study Media Production House
payment of old project and meanwhile ready to launch new one as well. It is preferred for new
production house it should have minimum three projects in hand at the start.
Personal links to get channel approval for project idea is another secret ingredient for every new
or old production house. The more you have strong connections in this field the more you will be
able to secure your projects with big channels.
To make firm step in the production house industry, one should start with small projects such as
Sitcom and Telefilm. These small projects will allow them to understand the detail of this field
and will train them to go higher with huge budgets and huge projects such as Serial, Drama soap
and films.
Once the Production house is ready with script writing, theme or idea for a new project then they
should immediately finalize Star Cast by contracting them earlier. This will give them edge to
pitch script writing with channels. Channels would be happier to work if production house has
already arranged well-known celebrity of industry for their project.
The number of production houses are increasing at a very fast pace due to demand pattern that
rises every single day. Although they are numerous in number currently but that does not prove
logic to disregard the idea of starting a production house for a newbie. The idea here is to
promote the availability of services to the growing needs of public not for just drama soaps,
serials but animated films/cartoons for younger ones.
Increasing demand pattern for entertainment programs widens the vision to enter in this dynamic
field and public is more inclined towards quality dramas. Concurrently, the competition is very
high and need big investment for an entry in this business. One should start with firm and
properly designed business plan in order to succeed over competition. The penetration into the
target market i.e TV channels in the case of production house is only based on the work
excellence and building the trust with channels. As a result, production houses rely on directly
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Pre-Feasibility Study Media Production House
The public want entertainment after a hectic routine of daily life; most of them want quality
shows to pass their leisure time instead of watching dramatic/plotted news. Therefore, they are
likely to take interest and are willing to watch good dramas, serials and telefilms. Hence there is
a need for new production houses to be setup in Pakistan.
In 1946 Eveready Pictures was established as first production House Company by J.C An ad,
which became the largest film production and distribution company in Pakistan. The following
year, Evernew Studios was established. In 1947, after Pakistan’s independence from Britain,
Lahore was regarded as the production hub of Pakistan. Upon independence, there was a
shortage of funds, filming equipment which initially paralyzed the industry. With hardships
faced, the first Pakistani feature film, “Teri Yaad” released on 7 August 1948, premiering at the
Parbhat Theatre in Lahore. Initial famous Pakistani dramas are Waris, Dehleez, Anganterha, Alif
noon, SonaChandi, Alpha Bravo Charlie and so on. The very first time PTV transmitted its live
telecast was on November 26th, 1964.
Currently Pakistan is country of vibrant media. There are number of private as well as state
television channels in Pakistan. These private and state television channels broadcast all kinds of
media stuff like news, documentaries, current affairs talk shows, dramas, and music, sports and
even religious programs. These television channels are always in need of quality productions and
that demand gave rise to the emergence of many private productions houses in Pakistan which
produce all kinds of entertainment and commercial productions.
To understand the market scenario, a fact realized by having discussion with field experts is that
a person with good knowledge of the business, reasonable amount of investment, good PR and
links with TV channels can start his own production house. Moreover as per the market scenario
and discussions with field experts there are currently around 50-80 production houses in Pakistan
that are active and the majority lies in Karachi, termed as the business hub. Currently the boom
of media industry has opened up many opportunities for a new entrant who wishes to provide
creative and quality matter.
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Pre-Feasibility Study Media Production House
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Pre-Feasibility Study Media Production House
telefilms. This expansion increases accessibility, thus, making it more convenient for filling in
the gap for a new production house and ultimately increases competition. Especially in recent
years, we have been introduced with quality dramas and serials at our channels and this shows
the potential of media industry.
7.2.2 Focusing on Linkages
In the current market scenario mostly media houses are linked with TV channels in order to
secure their business and portfolio. They are now termed as sister companies more rather than
independent production houses. This linkage is beneficial for both and as per the market experts’
opinion, for a new production house, a necessary step is to find the initial references at the start
in order to get the business.
7.2.3 The Future of the Industry
The media industry is growing by leaps and bounds and becoming increasingly competitive in
Pakistan. The revival of Pakistani films, dramas, serials and telefilms has led our audience to a
new level. In the face of rising competition and slot wars, a nearly insatiable demand of the good
quality entertainment shows will continue to open new opportunities for filling the gaps by new
entrants of this industry. Moreover the experts and experienced individuals will strive hard to
find ways to serve their customers by making their services even more attractive. Nowadays
many channels are likely to focus on starting their sister concerns as production houses in order
to cut their expenses and to capture part of this market by offering total arrangements under one
roof.
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Pre-Feasibility Study Media Production House
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Pre-Feasibility Study Media Production House
1. All expenses are calculated on average cost of seven currently working production houses
4. Key members for project will be hired on permanent basis, such as production manager
& script writer.
All the figures in this financial model have been calculated for estimated sales of Rs.
80,896,800 in the year one. The increase in sales and cost of elements per year is worked out at
10%.
The following table shows internal rate of return, payback period and net present value of the
proposed venture.
Table 9.2- Project Economics
Description Details
Internal Rate of Return (IRR) 37%
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Pre-Feasibility Study Media Production House
Following table provides details of the financing required and variables related;
Following fixed and working capital requirements have been identified for operations of the
Production House Company
Vehicles 5,229,000
Cameras 1,825,000
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Pre-Feasibility Study Media Production House
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Pre-Feasibility Study Media Production House
An essential cost to be borne by the Production House Company is the cost of electricity, water
and gas. The electricity expenses are estimated to be around Rs. 47,000 per month, whereas
water & gas expenses are estimated to be Rs. 4,500 per month. Furthermore other charges like
maintenance, telephone, office rent and Fuel charges for vehicles are estimated as Rs. 20,000,
Rs. 15,600, Rs. 126,000 & Rs. 35,000 per month respectively.
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Pre-Feasibility Study Media Production House
Based on the production of 2 Telefilms 1 Sitcom and 1Serial, sales revenue during the first year
of operations is estimated as under:
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Pre-Feasibility Study Media Production House
10 CONTACT DETAILS
In order to facilitate potential investors, contact details of Private Sector Service Providers
relevant to the proposed project are as follows;
4thFloor, Eveready
Eveready Chambers, 021- 32634817- eveready@cyber.net. http://eveready
Productions I. I. Chundrigar 18 pk group.com
Road, Karachi.
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Pre-Feasibility Study Media Production House
13-H, Block 2,
Teamwork
P.E.C.H.S, 021-4555327 info@teamworkproduction.com
Production
Karachi.
Shop # 20B
Hashmi Shopping
Center,
Hashmi Photos 0213-5675582 care@hashmiphotos.com
Preedy Street,
Saddar Karachi.
Pakistan.
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Pre-Feasibility Study Media Production House
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12 ANNEXURES
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Pre-Feasibility Study Production House Company
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Pre-Feasibility Study Production House Company
13 KEY ASSUMPTIONS
Description Details
Debt: Equity 0:100
Description Details
Business/Sales Increase 10%
Increase in Cost of Elements 8%
Operational Days / Month 26
Operational Months 12
Annual Operational Days 312
Description Details
Increase in Utilities (Electricity / Water / Gas) 10%
Increase in Staff Salaries 10%
Increase in Office Expense 10%
Increase in Rent 10%
Profit Margin 25%
Income Tax Rate 20%
Description Details
Sales on Credit - as %age of total 100%
Accounts Receivable period (months) 3 months
Provision for bad debts 05%
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