Disney-RIL merger an opportunity to compete against global players: Uday Shankar

Reflecting on the evolution of media and entertainment and the pending Disney-Reliance merger, media mogul Uday Shankar recently said that with “big competition from global players like Google and Meta, who are taking away most of the digital ad revenue, the merger is an opportunity to leverage the inherent strengths and make a strategic pivot”.

In an interview with McKinsey, Shankar said that India is one of the few markets where television still has reasonably good health but a lot of it is changing as connected TVs and handheld devices have become very substantial and mainstream.

“Everybody knows that the media market is going through a huge transition. And while India is one of the few markets where television still has reasonably good health, within that, a lot of it is changing. Connected TVs and handheld devices have become very substantial and mainstream.

“You’re competing with global players: Google and Meta. Most of digital advertising revenue goes to these two companies. So you need to pivot; you need to create a business. We saw an opportunity to leverage our inherent strengths and make that strategic pivot. That’s the primary rationale for the merger,” he said.  

He also spoke about how on the streaming side, there’s an opportunity to innovate and disrupt the monetization models.

“If you continue to push only SVOD [subscription video on demand] and AVOD [advertising-based video on demand] revenues, you’re limited.

“While there are a lot of people today who are willing to pay for content and who are interesting or important to advertisers, there are also a lot of people who are not relevant for either of these models. You need to create unique or native monetization models to create value from that base,” he observed, adding that whoever manages to create new revenue streams definitely has an advantage.

Walking down the memory lane, he also spotlighted how a major shift took place in sports broadcasting in India after he emphasised the critical role of local language commentary.

He highlighted how this aspect had long been underestimated in a diverse country where the majority of the population struggled with English.

Reflecting on his journey with Star India under the leadership of James Murdoch, Shankar asserted that he always emphasised on how catering to regional audiences is essential for the future of sports media in India.

 “We persuaded Fox global leadership to let us buy out the ESPN stake in their business, which people thought was crazy. If you looked at the financial case for that business, it was losing money hand over fist. But I recognized a joint-venture business wasn’t designed for the people of India. To give you an example: maybe 85 percent of cricket commentary used to be in English in a country where an estimated 3 percent of people are comfortable with English. And most of the remaining 15 percent of the commentary was in Hindi.

“That’s because the wisdom among all the established sports broadcasters then was that nobody was interested in the commentary; nobody was interested in the content. They just wanted to see the action on the ground. But that’s like saying that the soundtrack of a movie is irrelevant. So there was an opportunity there,” he told McKinsey senior partner Ramdoss Seetharaman and McKinsey Global Publishing leader Raju Narisetti.

A big believer in local languages, Shankar said he was one of the first people to push for regional language news channels.

“I’ve always been a big believer in local languages. Even for the news, I was one of the first people to push for regional-language news channels. Then, in entertainment, Star was very big, but Star was limited to Hindi and a little bit of English.

“When we took over, we went market after market in every major Indian language, and we launched channels there. And today, Star’s leadership is rock-solid because of that,” he said.

This led to applying the similar model for sports, he added.

“So we thought, why couldn’t that model work for sports? My first conversation with my then-boss James Murdoch didn’t last long, because everyone thought, if ESPN is struggling, why does it make sense for somebody who has no experience to get involved?

“But we flipped it and said, it’s not about sports but about people,” Shankar said in the interview.

Shankar said that his team worked on it for two years and came up with a plan and today, less than 10 percent of sports consumption in India is in English.

“It’s gone so deep that now we are doing it at JioCinema and other places where content includes regional dialects, not just languages,” he said.

The media mogul also said that he believes in doing less but with greater impact.

“In all the roles that I have played in the last 15 years, the big value that I have added for my teams is to push them to do less, but with greater impact,” he said.

Talking about the leadership lessons he learnt in his journey, Shankar said that all of the leaders have clarity, patience and a high threshold for failure.

He said they taught him how to back people up once they had won his trust.

“All the leaders I’ve worked with are unique in their own ways. I’ve learned from each one of them: from Rupert, James, and Lachlan [Murdoch], because I worked so closely and for such a long time with News Corp and Fox, and from Mr. Mukesh Ambani [of Reliance Industries], who I’ve known for a long time and am now working closely with.

“The first thing is they’re all very clear about why they’re doing what they’re doing—and that clarity is very helpful. They all play to win. And they all have a high threshold for failure. They’re patient, and they’re not willing to give up. They all work on trust. They all take their bets on people. And once they trust people, they’re willing to back them up. And I learned that myself. I take my bets on people; I trust them once they earn my trust. And I back them up,” he said.

Speaking on what Western media companies don’t understand about India, Shankar said they haven’t succeeded in India primarily because, often a global strategy is already defined by a team that has never been to India or doesn’t know India.

“They look at India as the headline value of a population of 1.4 billion people. But if you look under the hood, barely 60 million people or so fall into the ‘affluent’ category [with an income of greater than $10,000].

“So which India do Western companies want to address? They come here for the 1.4 billion people but start designing solutions for 60 million people or less—that’s where the big mismatch is,” he said.