Zee and Essel Group chairman Subhash Chandra is undaunted by the entry of telecom players like Reliance Jio into the content space. Steering a conglomerate of 28 companies, including media flagship Zee Entertainment Enterprises, Mr. Chandra, a Rajya Sabha MP, spoke about the emerging challenges facing the media industry and his thoughts on succession. Edited excerpts:
How do you perceive the changes in the media industry?
I will start with the media business only. It was only after the entry of private television channels in the 1990s did this become an industry. Now there’s a digital wave that began in the past 2-3 years. So version 1.0 got over in 1992 to 2004. 2.0 is currently underway with digitization and OTT players.
In the media business, the lines are getting blurred between telecom, voice, data and video as all are merging into one single pipe. New players have come in with Jio being a big example. That has helped put the industry into the 3.0 phase.
Jio’s entry has made the delivery pipe cheap and forced other telcos to do the same. This will help content companies like ours. However, Jio’s ambitions are very different... the DNA of that organisation is to be a monopoly rather than being a part of the industry. That will probably spur the industry into merging the content player with the pipe and data, which has happened in America and Europe.
We have seen AT&T take over content companies or the content companies have taken over telcos. Verizon has entered the distribution of content, Comcast has turned itself into a broadband company rather than a media company.
Even the Amazons, Googles and YouTubes of the world now call themselves media companies instead of tech companies. So, thanks to Jio, this process, which could have taken 5-10 years, has accelerated in India. That’s an interesting development for this industry.
As for our other businesses, when we completed 90 years as a group in May 2016, it was business as usual. The motivation to start the infrastructure business was to have at least one business that gives you annuity income. Others are services businesses that don’t give you annuity income. If you keep the customer happy, you make money. But in a household, if there are five people, keeping all of them happy is also difficult. When you are dealing with millions of customers, if something doesn’t work out, we should have an alternate income.
Essel Packaging was born from our traditional business in foodgrains and rice. We used do business with Food Corporation of India, they didn’t have storage space so we started making plastic containers. We rented a plant for that experiment so started packaging, it became Essel Propack and started doing well.
Seven years back, when we brothers separated, that business went to my youngest brother. He has now decided to sell it. He is more of a believer in holding cash and investing – that’s his view. But that company did very well. One was feeling proud that 35% of the people in the world used our tubes every time they brush their teeth.
What’s your strategy with Jio’s entry potentially changing the game?
We have competed with all media companies. Today, NewsCorp is in India through Star. Time Warner was here, Viacom came, Sony is here, Discovery is here.
So, of the top eight global media firms, five are here and we have competed with all. In 2007, a management consulting firm said India will be left with just 3 players and Zee is the weakest link that will either close or get sold. That didn’t happen. Similar reports now say that Zee is a hard nut to crack.
Now, this gentleman ( referring to Mukesh Ambani ) has a different style of doing business. We will fight this out too. We will still stick to our ethical business practices. But maybe their thought process won’t work here. The reason – the broadband pipe has no differentiator. Data is data, pricing is the differentiator. Content is the only differentiating force.
The question now is can better content be driven solely by more money. I have learned in 26 years that only money cannot give you best content. I once read a Time cover story on Steven Spielberg where he said ‘If somebody thinks he knows what content will work in movies, he is fooling himself and the public.’ I also remember a time when KBC became a hit and Zee’s ratings went quite low, analysts naturally wrote negative things and our stock price fell. Yet, we remained profitable. In 26 years, we have probably had just one quarter when we made a loss. At that time, we called several big directors like Ketan Mehta and Sudhir Mishra to make good content for TV. They said: you pay too less.
We used to pay ₹3.5-4 lakh for a 30 minute episode. I said, you tell me how much should we spend… So we spent more, upto Rs 12 lakh an episode, and got Ketan Mehta to make an action thriller Pradhan Mantri - Time Bomb and got Kay Kay Menon to play the lead character.
Yet, the ratings didn’t come. I was willing to pay up to ₹20 lakh, but I wanted some assurance on ratings. So, money alone can’t do… creativity is important. This is a differentiator on which how much they [Jio] will be able to do [is unclear]… We know the deals they have done on the content side. They have money… one person has been given ₹1,000 crore to make films. But we also know the background of that someone over the last 25 years. I think we will win the game. The positive side is this has helped us to grow and that’s the bottomline.
Do you worry about regulatory capture as the regulations on this front are framed by the telecom regulator and the TRAI chief has got a 2-year extension…
Yes, I called up to congratulate [TRAI Chairman Ram Sewak Sharma] and told him ‘Everyone is saying that Reliance has got you this extension. Your name is getting associated too much with this and this shouldn’t be the case.’ He said, ‘No, no, you have seen me at work, I am not like that’. I said: ‘Yes, but I am telling you upfront what people are saying’ [laughs]. We will see the regulatory issues also…
How do you view Amazon Prime and Netflix?
Amazon Prime has a different model. By connecting to them with content, they bring customers to their shop and push e-commerce. We are also giving content to them. But we are not giving content to Netflix. Netflix is a pure content player and it is successful in the U.S. as the cable bill used to be $120 a month. That is not the situation here — it’s $6-$7. There, the industry also erred by giving up all its content, which helped Netflix establish itself.
You have recently roped in Amitabh Chaturvedi to drive Essel Finance. Whats the bigger plan – Banking?
No… He had come to me 6-7 years before joining. This time, he said, I want to start and if you give me some capital, I can grow. We are acting as a venture capitalist. We have given our brand name. And because we have invested and lent our brand, we will exercise some control but it is his venture. It has now been four years, it’s growing steadily. If the rules of the banking system change, we will see.
How has your experience in Parliament been so far?
I had gone there to learn how the system works in the highest law-making body. That, I have understood. But to be honest, I have not been able to contribute to it. To contribute something, one has to be full-time, which I could have been. But what I saw and gleaned and the timing was such that when I was sworn in last August, the House was not allowed to function for the next two sessions.
So in the last 50 days, the amount of time I have wasted, I think I must not have wasted in 50 years. So I got demotivated. I also noted that even if I want to work full-time, I could gainfully utilize only 20% of my time.
The system is such — you list a question, wait for it to be listed or not listed, then the day it is listed, whether your question makes it through the lottery to get starred or unstarred status… there’s too much uncertainty. Those with motivated questions have managed to game the system so their questions will come no matter what. Your question may not come… or you start playing that game.
What’s your view on the shape of the economy and governance?
For a lot of the actions taken by the government, the results will come though they are perhaps not visible now. Top level corruption has gone down, but the middle or lower levels, it is still largely the same.
The use of technology will help reduce interaction and the Jan Dhan Yojana and Direct Benefits Transfer (DBT) plan will show results – more money is reaching the poor directly than the fifteen paise to a rupee that former PM Rajiv Gandhi spoke of. From the advertising industry, we understand rural areas are showing greater demand growth. This means that the DBT plan is working. But eventually, the economy will work well when you reduce subsidies. People have got used to getting some handouts from governments.
The Opposition is trying to unite against the BJP. What do you feel are their prospects?
It’s an eminent possibility. Everybody will obviously try… I think it will get stuck on the issue of who should be the PM and get derailed. Because till you announce who is PM, even if you are united, winning is difficult. The people would like to know who will be the PM, if not (Narendra) Modi.
Twenty years back, you were known as India’s media moghul. What would you like to be called now?
I would like to be known as a social entrepreneur. When we completed 90 years as a group, I said whatever I do now must have some social, environmental or job-creating relevance. We are working on a few such ideas.
In Uttar Pradesh, we have begun work on e-rickshaws, for instance, which can normally be used for 8-10 hours till the battery runs out. We are putting in place battery-swapping infrastructure, so by the time a driver has tea, the battery will be changed. Then you can run the rickshaw for two shifts and employ two people instead of one. This can boost income while sweat the asset more appropriately. We are doing this with 25,000 e-rickshaws and 25,000 three-wheelers.
Do you have a succession plan in mind?
It’s not very well formalized but if both the sons are shaping well… A few things are taking shape in my mind that I will firm up soon. But it’s clear that the next generation is walking down the right path. I feel at times that we should institutionalise the framework so that the businesses can keep moving smoothly irrespective of who is running the show. So the first step we have taken is to create a value-based organization.
There are seven core values religiously followed by each and every person in the Essel Group — Customer First; Be Frugal; Respect; Humility & Integrity; Speed & Agility; Solve Big Problems; Accountability for Results; and Go for Big Hairy Audacious Goals.
Do you have a revenue target for the group?
Every firm (in the group) has a target. But I have no dream to be no.1 or no. 5 in the country. If you set too many expectations, you can get dejected. It’s better to focus on your work rather than build expectations.
