It's time for Indian firms to compete with global players in their market: Punit Goenka
The MD & CEO of Zee Entertainment Enterprises Ltd says he does not want to become Netflix, but wants to give them competition
Last week, Essel Group decided to undertake a strategic review of its shareholding in Zee Entertainment Enterprises Limited (ZEEL) with a view to maximise value for the business. It was decided that 50 per cent stake in ZEEL will be sold to a strategic partner. Nawal Ahuja, Co-founder of the exchange4media group, caught up with Punit Goenka, MD & CEO of Zee Entertainment Enterprises Ltd, to talk about the stake sale, possible partner, what changes will take place once a partner comes on board and much more.
What prompted you to go out and seek a partner to divest part of the promoters’ stake, given that you are fundamentally strong on some of the key aspects of media?
The aspirations of the family and company are to not only be a very successful South Asian diaspora media power, but go beyond the South Asians, to the global frontier. We do believe that we understand and can create content for the world if we get partners to help us in the two areas concerning technology and geographical reach. We have captured and conquered South Asians across the world and dabbled with some of the non-Indian languages in key markets like Middle East, South Africa, etc.
Our objective is to enable people to consider ZEE as a mainstream media company like a Disney or a Fox or NBC. Technology can be bought, although customising it to the consumer’s need requires a lot of effort. For instance, ZEE5 is our third attempt in the OTT world. Our first two platforms did not do as well as they should have.
If you look at companies like Apple or Netflix or Amazon… globally, they have tried to disrupt the traditional broadcast model, which has been ZEE’s stronghold for the last 25+ years. Given that, what would they see in a company like ZEE to become a partner?
The content capability of our company is not replicable in any way. Today, if you look at any media tech company operating in India, you’ll notice that they operate in a very niche market segment. They at best look at 1-2 per cent of this country because their content spread is restricted to 90-10, i.e. 90 per cent international and 10 per cent domestic. Whereas, in India, the consumption pattern of Indian consumers is their own preferred language content. Our own ZEE5 platform has 55 per cent+ content in regional languages, not just Hindi, within a short span of 6-7 months of its launch. The attractiveness of ZEE is going to be the inherent capability to create local content. Plus, ZEE5 has become the No. 2 OTT platform within six months of its launch because of the inherent value of the content that we possess and the investments we’ve made in the film libraries, etc. That’s the benefit we see.
Where does the family plan to deploy the cash? Are you looking at new business verticals? There were some talks that you might be looking at getting into the BFSI sector or launch some products there?
We are already in the BFSI sector in our SL Finance portfolio, which will be one place for us to use the capital. We want to look at other new age technology areas where we can deploy or have aspirations to expand the business. But, that’s something perhaps better explained by Dr Subhash Chandra. I am focusing on choosing the right partner and taking ZEE to the next level over the next five years.
What kind of a partner do you have in mind?
First and foremost, the most important thing is the value system. Irrespective of whether the partner has the same value system as us, as long as the meaning of what the two hold are the same, it will be critical for this partnership. It’s once-in-a-lifetime kind of a partnership that we create and therefore it’s critical for both organizations to have a similar value system. Willing to give them equal partnership with the family means that they will have equal rights, because eventually we will run this business jointly.
But the family currently heads the business operations. So what happens to that?
I value the family’s contribution and management of the business to help bring it this far. The plans for the South Asian diaspora are already in place for the next 3-5 years. I don’t see any reason why those need to be changed. They can at best be shored up, in terms of bringing those investments forward. I don’t see why a strategic partner should need to get rid of the family running the current business in its current form. But, if they choose to do that, we have a very good professional management team to run each of these verticals.
Since you are looking at expanding your global operations through this strategic investment, do you have a structure in mind?
Today, we are structured in a way that we have Punit Misra running the domestic broadcast business, and Tarun Katiyal running the ZEE5 domestic business. We will also be creating a separate structure for the global audience space, both for the broadcast and the digital piece. The broadcast piece for South Asia in the international market will be the current structure itself, because it’s a very lean operation and has not been growing significantly. Therefore, the focus will be all on the digital space for the international part.
How do you see the OTT space? Do you think that for broadcast companies, 10 years down the line, OTT is going to be bread and butter? That the majority of the broadcast companies of today will be OTT-driven tech media?
They would have to be, if they want to survive in the long term. If they want to remain only broadcasting companies, they will be at the bottom of the pyramid, because that’s where broadcasting will come down to. Whether that happens in 10 or 15 years is anybody’s guess. But the way I look at OTT, it will become the top and the middle of the pyramid, while at the bottom of the pyramid, will be broadcaster.
When you sold Ten Sports 18 months back, you made a conscious decision to stay away from sports, and one of the reasons was BCCI cricket being out of the purview. When it comes to OTT, do you think lack of sports makes a material difference?
I don’t think so. Netflix and Amazon Prime in the United States don’t have sports and they are the most successful OTT platforms in the world. The same logic applies for TV and OTT too. What is changing in OTT vs TV is that you can cater to a smaller community along with a mass community. Sports is event-driven; it brings in traffic and eyeballs at that event, but it’s not sustainable. The numbers fall off the moment the sports event is over. Plus, there’s the cost of acquisition. But it’s on the entertainment side that you have repeat customers coming every day, which is far more profitable than just having sports properties.
What is your opinion on the paper that the government has circulated on OTT content regulation?
It is largely to do with OTT services that are in direct competition with telecom service providers. So the voice and messaging OTT is being regulated. It is not covering the video part of OTT. That they are still leaving open.
Do you think at some stage, the government will be interfering there too?
I don’t know how you can exercise control in today’s environment in India where the Internet has become open. I mean, can they control Google or block porn sites? Even if they’ve shut down 300 sites that doesn’t mean that porn is not available on the Internet, right? If they had started those kind of controls 20 years ago, they would have achieved it today. But if they do it today, it will take them another 20 years to achieve that. We don’t want to create another China, which is a closed world in itself. It is not in the consumer’s best interests.
And where do you see Punit Goenka three years after the disinvetment is done?
I am tired of people telling me that companies with deep pockets have come to our country to compete with you. I want to go compete with these people wherever they are now in whatever small manner I can. I am not saying I want to become Netflix, but I am saying I want to compete with them. I have earned the right to do that. I want people to say that this is the first media company from an emerging market that has come and given us some competition. I want to make that mark.
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