This article provides an overview of Subhash Chandra, the founder and chairman of Zee Entertainment Enterprises Ltd (ZEEL). It discusses how Chandra has maintained profitability for ZEEL against changing media dynamics through a unique low-cost business model. While this model has helped ZEEL succeed, it has also led to high employee turnover as creative staff seek better opportunities elsewhere. The article also notes some of Chandra's other business ventures beyond media and questions if he can adapt his strategy amid new challenges facing the entertainment industry.

1. cOVeR StORy
the
IVOR
SURV
Once constantly under attack
for all-too-easily giving up his
first mover advantage in the
Indian satellite television
sweepstakes, Subhash Chandra
nevertheless deserves acco-
lades for the manner in which
he has retained reasonable
profitability compared to peers,
against changing dynamics of
traditional media businesses,
stiff competitive onslaught and
ever-demanding consumers.
What sets him apart is his
completely unique way of doing
business. Will he survive the
new threats to his empire,
asks pallavi srivastava
Photo: Vikram kumar
76 4ps BUSINESS AND MARKETING 30 JA NUA RY - 12 fEBRUA RY 2009

2. cOVeR StORy
Channels market share
Market share of ZEEL across categories
Channel Market Channel Market
category share category share
Music 20%
GEC 20%
ETC music
Zee TV
ETCPunjabi
Zee Next
Zee music
Zee Smile
Movies 40%
English 30%
Zee Cinema
Zee Café
Zee Pre-
Zee Studio miere
Source: Market Reports
Zee Trendz Zee Action
Zee classic
Sports 30%
Zee sports Religion 24%
Ten sports Zee Jagran
the Zee stock (at Rs.92), continues to
trade at about 10 times its likely
fY2008-09 earnings?!
Market watchers, punters and drift-
ers alike don’t tire comparing Subhash
Left: Subhash Chandra shares a photo op with Henry Kissinger and prannoy & Chandra to global media mogul Rupert
Radhika Roy of NDTV; Up: punit Goenka – stepping into Guha’s shoes... Murdoch. Chandra himself agrees:
“Being a strong entrepreneur and risk
taker, my beliefs have been very similar
over Rs.500 crore for a year! While on being at number four or five in the to Murdochs’ (smiles).” However, a
Hindi news category (in terms of TRPs),
the face of it, the model does appear closer look and you encounter his un-
high-cost, yet Colors has benefited. Zee News is one of the two channels in canny similarities with another media
Within just three months of its launch, the category to make profits. It is Chan-
Venue: Zee Entertainment headquar- salt n’ pepper savvy hair-do and a leg- ho. That perhaps is the primary reason Colors replaced Zee from the number dra’s low cost model only that has en-
ters in Worli, Mumbai (2005) why its top show Bidaai… is made at a 2 spot in the Hindi general entertain- abled his regional channels like Zee
endary business acumen to match,
People: Sr. Creative Team of Zee TV Telegu and Zee Kannada to break-even
would not ever dream of allowing such significantly lower cost compared to ment space.
Hot Topic: TRP leader Star Plus has ‘grotesque wastage’ of money. Today, Ekta Kapoor’s high budget K-soaps But tell that to Chandra and he re- in less than two years, when the aver-
plush budgets of Rs.15-20 lakh per epi- those very same creative types (now that have now unceremoniously been mains unfazed. “We will not fall for this age break-even period for a channel
sode per show. Maybe Zee also needs to employed elsewhere of course) can’t taken off air. high cost model trap. We would keep is minimum three years.
revise its comparatively smaller budget In an interview with 4Ps B&M,
stop praising Chandra’s low-cost train- our heads down and let the storm Moreover, a projected slowdown in
of just Rs. 3-4 lakh per episodes for its ing, especially in the present economic Chandra admits proudly: “Essel group pass,” avers the protagonist of Zee’s advertising revenue notwithstanding,
newly-launched prime time properties gloom. “Though it was a forced train- never believes in over-doing things.” success saga. And a true-blue, self- Zee’s diversified TV channel portfolio
viz. Saat Phere and Dulhan... ing for us, but it was good training in- He goes on to preen about how new styled protagonist he is! Unlike his is expected to keep the broadcasting
deed. I learnt the basic fact that you GECs launched last year are operating peers, he’s never really been in the company as the preferred option
E
don’t need mega budgets to make a on a high cost model–spending big TRps rat race; instead preferring to for advertisers. No longer does Zee TV,
stick to his own business model, which
ven as senior creative hon- show hit,” reminisces Vivek Bahl who money on programming, human re- the flagship channel, account for the
lion’s share of ad revenues (it only ac-
chos at Zee vent their feel- was a part of the Zee creative team in source and marketing–that translates has made him a billionaire over the de-
2005, working on shows like Saat counts for about 26%); instead bouquet
ings with perhaps a twinge of into longer time period to survive on cades; and he makes sure that his key
wistfulness (and jealousy to- Phere, Dulhan, et al before he left to channels (Zee Cinema, Zee Café’
internal money before they break even. people maintain the same zeal. Echoes
ward their carefree money-burning and Zee Studio) are seemingly contrib-
join Star plus. He’s now Senior Cre- His assessment is not too far from the Barun Das, CEO, Zee News Ltd.,
counterparts at rival Star), the utter truth. Viacom 18’s Colors that has near-
ative Director, Star plus and Star One. “There’s no point going for the rat race uting almost half the company’s ad
uselessness of this ‘hot discussion Ironically, to ride the present downturn ly displaced Zee from its number two of hyped TAM ratings if you are unable revenues. Analysts say that even after
(with steep falls in future advertising
topic’ was not lost on them. They knew position in the GEC space has spent to make profits.” Chandra’s eyes are a projected loss on ad revenues, Zee
revenues indicated), even Star is now
that they could discuss and debate all Rs.150 crores only on marketing and always on the bottomline - be it the may still grow earnings by 15-20% over
they liked, but Zee head honcho Sub- picking a leaf out of Chandra’s low-cost distribution. As per estimates, just the short, medium or long term outlook. the medium term. Still wondering why
hash Chandra Goel, with his trademark model and giving it an energetic heave- programming budget of the channel is According to an equity analyst, despite despitethe Indian Sensex’ lean patch,
78 4ps BUSINESS AND MARKETING 30 JA NUA RY - 12 fEBRUA RY 2009 30 JA NUA RY - 12 fEBRUA RY 2009 4ps BUSINESS AND MARKETING 79

3. cOVeR StORy
“CHANDRA HAS
and Indian Railways. Says Rajiv Tiwari, adamant. “That’s why there were some
Director, True Wealth Creators (and exits in senior management last year,”
LEARNT HIS
former Vice President at ZEE News), he adds grimly, perhaps hinting towards
the exit of pradeep Guha (the ex-CEO
“Subhash Chandra is tough and has
BASICS IN THE of ZEEL, who was used to the high cost
learnt his basics in the field. Imagine
spending style at his previous job in
at the age of seventeen he taught food
fIELD. AT THE Times Group). Rajendra Sinh, Corpo-
gap and act upon it even before the channel in markets like Up and Andhra Corporation of India how to store
pradesh (Zee 24 Ghantalu). Star India
consumer realises the need. As Ashish wheat.” More than anything else, Rajiv rate Director HR, Essel Group, can-
AGE Of 17 HE
tycoon, Ted Turner. If Turner is a col- Kaul, Executive Director & Business too has begun following a similar line truly salutes Chandra’s spirit of keep- didly observes, “Non performing assets
TAUGHT fCI
lege dropout, Chandra drew the line at Head of UAE based Credence Inter- of thought. The logic is again simple: ing costs under control at all costs! even at senior level are not accepted.
school only; both Turner and Chandra national puts it, “His sense of spotting give advertisers a wider viewer base and There have been some wrong hirings
HOW TO STORE
thE Flip SidE...
began their entrepreneurial stint by a business opportunity is incredible a better channel bouquet to reach out in past and that’s why the high churn
rebuilding their father’s respective and that gives him an extra edge over consumers. Chandra deployed a simi- But every success story has its dark rate at Zee!!”
WHEAT...”
businesses. In Turner’s case it was a any other entrepreneur.” (Ashish lar strategy for regional entertainment side. And the side effects of Chandra’s At a time when high-flying consul-
worked with Zee for ten years & played
billboard business, while the latter in- channels way back in 1999. Others super hit low cost formula has spawned tants are paid millions of dollars simply
a key role in the launch of Dish TV and
herited his family’s flour mills. Turner started making their forays in this a human resource problem. Let’s go to reiterate the important role of hu-
the Indian Cricket League). The launch
took over the struggling ‘Channel 17’ space only a couple of years ago. “I back a few years. In 2005, Zee TV tive of being a family run business is man talent in any organisation’s suc-
of Dish TV in 2003 (the second private
in Atlanta in 1970 and within five years think he (Chandra) makes much more bounced back with fresh programming that objective decision making is not cess, this candour toward its people
DTH player Tata Sky came in only in
made it a nation-wide name. Likewise, money out of these regional channels giving a serious threat to Star plus’ su- always there,” feels publicis’ Gupta, resource may be the biggest chink in
2006) is a case in point. His timing was
Chandra gave India her first satellite than he makes out of the Hindi one,” premacy in the category. In fact, Zee believing that the group has suffered Chandra’s shining armour. At a time
channel in 1992, which is today the na- perfect, when even buying a DTH con- says Naresh Gupta, Head, Strategic actually outshone Star plus in TRps in because of this. Take the example of when the entertainment sector is wit-
tion’s largest television network. nection was considered stupid by con- planning, publicis India. the prime time band for a few weeks. ICL: Sources confirm that ICL was nessing unprecedented new-entrants,
Despite the similarities, there’s one sumers. But Chandra realised the And then there are businesses like But they couldn’t sustain the lead for conceived in 2005 itself, but the bu- and when innovative programming is
thing that differentiates Chandra from digital potential and started early, which playwin, Intrex Trade Exchange, Itz- long and Star plus soon reclaimed its reaucratic procedures delayed its the key to retain eyeballs, Chandra is
Cash et al. Clearly, the man has a clair-
both Murdoch and Turner: the sheer eventually helped him to not only grab position. So what actually happened? launch by two years. “Imagine if ICL losing many of his best creative people.
breadth of his Essel empire that a significant share of the market, but voyant ability to crystal gaze, spot new The low cost employee strategy back- was launched in 2005 it would have di- But the simultaneous economic slow-
stretches far beyond media & enter- also add subscription revenues to his business opportunities and turn them fired! The key people in their creative vided the international cricket in two down and the resulting ad revenue
tainment. Apart from the group’s broadcast business model. So by the into real businesses churning profits. team and programming, which were factions, taking the entire world by slump that its most likely to serve up is
strong presence across TV, print, mov- time, Anil Ambani, Sunil Mittal and Take ItzCash: it was started to support working on major shows at that time, storm,” exclaims a source familiar with certain to make Chandra’s low-cost
mantra win yet again. Game, set and
ies, theatres, DTH, cable to entertain- their ilk even caught on, Chandra had Dish TV’s payment collections in rural moved on because they got better offer the development.
(read: fatter pay packages). Vivek Bahl
ment parks; its non-media businessess already captured 60% of the DTH mar- areas and is based on selling cards Clearly, like a few other family run match... Now, that’s what we call a real
like packaging (Essel Propack), tech- ket with about 5 million subscribers. worth various denominations to con- the then Creative Head of Zee TV businesses, Essel Group lags when it SURVIVOR’S DESTINY!! 4Ps
nology, infrastructure, online lottery, It’s simple. Start walking before the sumers enabling them to recharge their moved to Star plus and Ashwini Yardi comes to giving freedom (especially
education, et al also contribute signifi- financial) to its senior management.
race starts and by the time others start set top box through their mobile the then programming Head of the
channel joined Viacom18’s Colors. As
cantly to the group’s coffers. Essel running, you’re halfway through! phones. Chandra saw the opportunity. This probably is one of the reasons why
propack is a world leader in manufac- Same is the case with regional news He re-launched ItzCash as a ‘Multi the big man himself admits, “Last year key senior guys at Zee have not stuck
turing laminate tubes, and raked in channels. When most broadcasters are purpose prepaid Cash Card’ to provide when all these fresh news and enter- around for long. Chandra himself ad-
revenues totaling Rs.11.93 billion in fighting for a share of the Hindi, Eng- cash management & control solutions tainment channels were launched many mits that there have been some such
2007-08 (67% as much as ZEEL did lish and business news space; Chandra in the manufacturer-distributor-retail- of our people were offered and taken at conflicts in the recent past, especially
during the same period). The non-list- has forayed into the regional TV news er dynamics for efficient payment col- three to four times more salary than when some in the senior management
with channels like Zee 24 Taas (Mara-
ed companies of the group are esti- lection and dynamic inventory manage- they got here.” felt that Zee should spend like others
thi) and Zee 24 Ghanta (Bangla), with
mated to be minting revenues totalling ment. The company now boasts clients And it’s not just money! “The nega- are spending. But Chandra remained
appx. Rs.40 billion annually. The online plans to launch more regional TV news like Reliance Energy, BSES Rajdhani
lottery business (Pan India Network
Infravest that operates Playwin) is a big
contributor and is estimated to pump
it’s all about profits! And Revenues too...
in around Rs.30 billion per year. “It’s
Net Profits of Essel Group’s listed companies (in Rs.millions) Revenues of the Group’s listed companies(in Rs.millions)
the drops that make the ocean. While
that is as trite a cliché as one can ever
Fy08 Fy07 Fy06 Fy05 Fy04 Fy08 Fy07 Fy06 Fy05 Fy04
get, it still embodies the first principles
ZEEL 4,160.60 2406.6 721* 1653.8 1169.7 ZEEL 18,353.70 14411.5 8340.1 7042.8 5402.1
of growth,” says Chandra, with a grin.
Zee News Ltd. 369.3 105.9 NA NA NA Zee News Ltd. 3,675.10 2355.6 NA NA NA
A BillionAiRE’S CRyStAl GAzinG... Essel Propack 608 411 460 409 398 Essel Propack 11,938.00 2825 2529 2268 2280
As a seventeen year old lad, with Rs.300
Dish TV** -4,141.28 -2528.28 NA NA NA Dish TV** 4,122.45 1916.48 NA NA NA
in his pocket, he got into the business
of trading rice. from there on, its al- WWIL** 2,710.10 1927 NA NA NA
WWIL ** -1,516.60 -1111.2 NA NA NA
ways been his ability to identify a need Source:Annual reports *Zee Telefilms demerged into ZEEL and ZNL **listed in 2007 Source: Annual reports *Zee Telefilms demerged into ZEEL and ZNL **listed in 2007
80 4ps BUSINESS AND MARKETING 30 JA NUA RY - 12 fEBRUA RY 2009

4. exclUSIVe
Call him penny wise-pound foolish (literally Murdoch as an entrepreneur?
SC: He is a strong entrepreneur and a
speaking!) or label him as the eccentric risk-taker; risk taker. My own belief system (being
Subhash Chandra has stood his ground against a strong entrepreneur and a risk taker)
has been very much similar to his (Ru-
mounting odds time and again. Here’s the man, his pert Murdoch). (Smiles) And that has
been confirmed during my alliance
hopes, dreams, ambitions and his present and future with him.
outlook for the media and entertainment industry... 4Ps B&M: How important is succes-
sion planning at Essel Group?.
SC: We give due importance to succes-
sion planning at all levels. Youth is well
4Ps B&M: How has been your entre- also spend like others are spending. represented in our group companies,
preneurial journey so far? But we said no to that. That’s why and rightly so. India has the world’s
SC: It has been a difficult journey but there were some exits at the senior largest proportion of youth and this is
at the same time an interesting and management last year. If new channel evident in Essel Group. Most of our
challenging one. I feel that we have launches are happening and they are
been able to make a difference. spending huge money we would not be
“I hope
4Ps B&M: How do you see the com- affected. We would keep our heads
petitive landscape in the broadcasting down and let the storm pass.
4Ps B&M: How is the slowdown affect-
business in coming years?
we’ll see
SC: We may see interesting changes in ing the media industry?
SC: There is no reason for India to par-
the sector. Competition will surely in-
tensify. Broadcasters who have sound ticipate in this slowdown because In-
the end
fundamentals will be better equipped dia’s economy is by and large (around
86%) dependent on domestic demand.
to take on the challenges. Channels
that were launched with no clear dif- But yes the businesses are getting af-
of frIvo-
ferentiation or viewer base will have to fected by it. It is affecting the media
learn to become more customer fo- industry too but it is all psychological.
cused or be forced to exit. It is reason- The growth in TV industry was esti-
lous
able to foresee some signs of consoli- mated to grow at 18-20% but we think
dation in the crowded GEC market it will come down to 15%.
4Ps B&M: Any new business areas?
through strategic business alliances.
expendI-
SC: At the moment our focus is to
Also, cost-cutting will have to give
way to looking at cost-effectiveness and carry on the existing plans that are al-
achieving higher levels of productivity. ready there. As we have announced we
ture...”
I hope we will see the end of frivolous are getting into Out-of-Home advertis-
expenditure in meaningless fare, frills ing business. Apart from that the focus
and promotions. The financial crisis is is to run the existing businesses prop-
an opportunity for more efficient play- erly and see how the economic situa-
ers in the industry to improve their tion emerges in the next couple of years
competitiveness and market share. before we do any new thing. CEOs and Business Heads are young
4Ps B&M: New channel launches have 4Ps B&M: How do you see the media executives, selected on the basis of
led to a lot of churn in human resource industry shaping up in few years? their capability, potential leadership, &
SC: It will be growing. from the cus-
at Zee. Your take? willingness to innovate. I believe in del-
SC: We never believe in over-doing tomers’ point of view, I am confident egation and empowerment.
4Ps B&M: You are quite passionate
things. Last year when new channels the days ahead will bring them a wider
about Vipassana. Comment!
were launched many of our people were variety of interesting programming.
SC: Yes, I am passionate about Vipas-
offered and taken at three to four times Our group has led the way to providing
sana. When we observe silence for 10
of the salary they were drawing here. more regional content in entertain-
We wished them good luck. We contin- ment and news. All this will boost ad- days at the centre, we realised it is the
ued our journey in Zee the way we have vertiser confidence. The Indian market only time one spends with oneself.
been conducting it so far. We never is big so the cable industry can also Otherwise, you are working for some-
over expand and we never were over find room to grow along with digital thing or the other including your own
ego. Vipassana helps to control that. As
ambitious. There were some conflicts penetration. Viewers can expect more
for me, Vipassana has helped me to
at senior level as some people in the entertainment value for their money .
4Ps B&M: How do you rate Rupert
senior management felt that we should control my anger. 4Ps
Photo: Vikram kumar
82 4ps BUSINESS AND MARKETING 30 JA NUA RY - 12 fEBRUA RY 2009