Indiantelevision.com's Excerpts of an Interview Zee Telefilms Chairman Subhash Chandra Gave to Awaaz

'I never lose sight of topline, bottomline growth'

Posted on 21 March 2006

It's been a long haul back on the upward curve for Subhash Chandra's Zee Telefilms but things are certainly moving north for his network (including the Zee scrip which is currently quoting at Rs 250). With flagship channel Zee TV firmly ensconced in the number two slot in the Hindi entertainment stakes, Chandra's has a lot to say on the heightened action in the media and entertainment.

Given below is an interview the media baron gave to Sanjay Pugalia, editor of CNBC TV 18's Hindi news channel sibling Awaaz, which aired on 17 March. Indiantelevision.com has excerpted it with due permission:

There is a perception about you that you start something and then forget about it. You move on and start a new project. Whatever you do is known for its novelty. There are reports that you are planning a mega entertainment city. We want to know more about that.
Our newspaper friends broke the news before time. Still I will say that we are planning an entertainment, health and sports SEZ. Several SEZs have been planned in the country but none in the field of entertainment, health and sports. I clearly see an opportunity in these areas. As you know getting treatment is very costly abroad. Several insurance companies are thriving on this. I have heard insurance companies abroad asking its customers to go to India and get themselves treated. They are even willing pay for airline ticket. Such is the cost advantage in India.

Similarly, so many people in Hollywood are interested in shooting their films in India. But the process is so complicated. They need 70-80 clearances to shoot their films here. With such SEZ in place, they can come and shoot their films without any hassle.

How hopeful are you of getting clearance and tax concessions for such SEZ?
We had applied for it when the SEZ policy was being formulated. We have been planning such a venture for almost five years now. This is not an overnight affair. I am not asking for any extra favour. We are hopeful of getting what is due.

What is the kind of investment do you see and when do you expect to complete the project?
What we will do is to build the infrastructure so that others can come and make use of that. We have some land and have asked for some more from the Maharashtra government.

After such hard work, Zee Telefilms has finally become number number two. When you look back what do you think went wrong?
Let me correct you. Zee Telefilms has always been number one. It is Zee TV that had slipped. Now Zee TV has reached number two position. However, with the kind of effort that has been put in now I am confident that it will soon regain number one position.

Suddenly we see Zee stepping up its expenditure on marketing, new shows and new channels. What will be its impact on the revenue side of the company?
Once you slip you need to put that extra bit to regain the top slot. We are doing exactly that. But this is an investment which will pay rich dividends. As far as new channels are concerned, I am of the opinion that entertainment space is going to expand further and you need to be present in all the segments. While existing players can afford that, it is going to be pretty tough for the new players.

One of the criticisms against you has been that you spread yourself too thin. That you lose focus. That you are present everywhere even if that means some compromise on quality. Can you recall how many channels the group has at the moment?
Yes I can. There are nearly 25 channels. I don't need to personally focus on all the channels. There are good people in our group. Four of my brothers and five people from the next generation are involved with various projects. Then there are capable people who are almost like my family. They are capable enough to handle things on their own. At the level of perception, though, we are seen to be compromising with quality. But that is only at the level of perception. I am confident that this will also change soon.

What are you focusing on currently? There's the sports channel about which there is a view that it will take some time before making its presence felt as it didn't get cricket telecast rights?
Those who follow the beaten track think that sports channel cannot survive without cricket. I am not one of those. It is a different matter that we could have got a head start if we had cricket. But there are other areas to be explored. India is a cricketing nation. I want it to be a sporting nation. We have got telecast rights for football for ten years. In association with the Indian Football Federation we want to establish many football clubs across the country. I believe that in the next five years, football will be bigger than cricket in the country. As per my own focus, I look after the sports channel and with my colleagues I look after the launch of new channels in South India.

As you said you are focusing on sports and regional channels. What are the other new initiatives?
We are doing so many things in the existing ventures. As per new initiatives, we have just launched channels in Indonesia and Malaysia. What we are doing is dubbing Indian content in their local languages. Soon we are going to launch a similar channel in Afghanistan. Efforts are on to dub Indian content in four foreign languages. This will be over and above what we have been doing so far. Zee network is already present in 120-125 countries.

There are reports that you are planning a channel with international content. Maybe a news channel?
Now you are forcing me to say things. It is true that we are planning a channel for more than two years. The work on content has already begun and I can assure you that it will be quite unique. Now I will tell you why we slipped. As long as we tried out new and innovative ideas we had no competitor. We launched a show on extra-marital affair theme way back in 1994-95. The launch of Sa Ra Ga Ma was equally unique. We slipped because we started imitating others. Now this is going to change. We have started doing new things. We have realized that the spirit of entrepreneurship is quite strong among Indians. So many people want to do things on their own. To catch that spirit we have planned a new show called Business Bazigar. The contest is open to all. We invite ideas, scrutinize them and if they are worthwhile, arrange for funding.

Maybe this programme is a reflection of your business journey. Will you please elaborate on this? How will it help people with ideas?
We invite entries. So far we have received 1.2 lakh (120,000) entries. Our experts scrutinize those ideas. If they feel that ideas are good we invite people to explain their plan. When we realize that they have a sound plan to execute their ideas we make them go through difficult tasks like setting up office in four hours, surviving in Mumbai on a rupee and a glass of bottle for 24 hours. Once through this also, we arrange for funding those projects. It could be five lakhs or ten crore rupees (Rs 100 million). We arrange funds.

From a shareholders' perspective, when they see you going for so much investment they often wonder what will be the value of their investment?
I never lose sight of topline, bottomline growth. As long as topline is growing bottomline will keep growing. So more investment means more topline growth.

So many people would have asked you this question before. Do you think Indian television space is crowded? Will so many players survive? Is consolidation bound to happen?
Consolidation has already begun. Your group has bought over Channel 7. Some more things are happening behind the scenes. So consolidation is bound to happen and it has already started. I believe that it will be tough for independent channels to survive.

So you mean to say that groups with one, two or three channels will find it tough to survive?
It will be difficult. But you never know. The country never fails to surprise us. I see so many newspapers coming out from so many towns and cities. I cannot figure out what is their source of revenue. But they are there. Maybe they have some other income.

'I keep telling Mr Murdoch that India is not a soft state. It has certain laws which need to be followed'

Quite a strong view on other income of newspapers. What is your assessment of the journey of DNA so far?
It started off with two lakh copies and the figure is growing everyday. The circulation has reached 2.3 lakhs. We expect that in the next 12 to 18 months it will be close to The Times of India.

Planning new editions of DNA?
Yes.

I believe the next edition will be from Delhi.
Not necessarily.

Your group has presence in whole host of businesses.Will you please list out your businesses- from real estate to wireless radio- for people who are not so familiar with those aspects of your group?
In real estate we are developing properties in Delhi and other cities in North India under the brand name Sun City. We have a partner in this venture. And our joint venture is doing quite well. In the business of wireless radio, we have 18 operating licenses and 80-85 per cent market share. We are thinking of expanding this business.

In percentage terms what is the contribution of your different businesses to the entire group?
In percentage terms, media and entertainment business contributes 20 per cent to the group's revenue, rest 80 per cent comes from elsewhere. There is a group company called Essel Propack. It has 19 plants in 12 countries. It is truly a multinational company and number one in the world in its area of operation. It manufactures tubes for toothpaste and cosmetic items. It has 40 per cent market share in the world.

Following the High Court order where do you see the implementation of CAS headed now and how will CAS and DTH impact each other?
I don't think CAS is an appropriate name. The name sounds a bit negative. CAS is bound to happen. The toss up is between analog and digital signal and I think it is in viewers' interests to have digital signal. In this respect CAS is bound to happen. One broadcaster is opposing the implementation of CAS because it wants to roll out its DTH business. But I don't think that is fair.

How is your DTH business doing?
We have got one million subscribers so far.

DD has more?
Yes, DD has more. It caters to a different segment. It doesn't charge anything whereas our subscribers have to pay some amount every month.

This has happened without Sony or Star?
Yes. Now Sony, Discovery and some other channels are joining our platform. However, we have proved that one million customers can live without Saas Bahu.

Now that Star too is gearing up to launch its DTH business what will be its impact on the DTH business? What about must carry clause?
Must carry clause came into force in December 2004. However, Star group never bothered to comply with the clause. Star Group doesn't seem to have any respect for the law of the land.

With recent reorganization and all where do you see Star Group headed now?
My best wishes for Mr Rupert Murdock. We do talk to each other sometimes. He was my partner earlier. I keep telling him that India is not a soft state. It has certain laws which need to be followed. You cannot keep flouting rules and regulations every now and then. Law of land will catch you in due course. But when you are successful you don't listen to even sane voices.

Do you think broadcasting sector should have a separate regulator?
Definitely. Indian media houses representing print, radio and television businesses came together to form Indian Media Group. We have demanded that broadcasting sector should have an independent regulator.

Given the favourable response of the present government towards globalisation do you see other media giants freely accessing Indian market, something you may not like?
India already is the most open country in this respect. Each and every country worth its salt has some restriction in this sector. Almost everywhere preferential treatment is being given to local players. We don't want preferential treatment. We want level playing field. All businesses that operate in this country have to pay taxes.

One final question. Are you satisfied with the
present rating system? Do you think it is authentic?
Like all areas, competition should be there in the
rating business also. It is not fair to judge people's mood on the basis of 4 to 5 thousand meters. I think given India's size, there should be at least 20,000 meters to gauge people's perception.

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