Concentrating on consolidation

Starting with a small cable TV network running a 3-hour video channel for the residents of Maker Towers in the plush Cuffe Parade area of Mumbai in the early 1980s, Ronnie Screwvala has come a long way. Today, the chairman of UTV Software Communications Ltd—his flagship company—leads a media and entertainment (M&E) business that clocked 148% growth in revenues to Rs434 crore and a 65% jump in profits, at Rs77 crore in 2007-08, over the previous year. UTV Software Communications is now trying to strengthen its position across five fast-growing verticals in the M&E space—films, broadcasting, gaming, Internet and television content. But Screwvala has stayed away from the frenzy that engulfed most of his rivals in the past two years. Even as they try to get a finger in every M&E pie, Screwvala goes about building his empire quite cautiously. He talks about his strategy of focusing only on the underserved or unserved gaps in the M&E business, the impact of the current slowdown on the industry and his own business and overall growth plans. Edited excerpts:

Most media companies have been very aggressive in expanding their businesses in the past two years. Most entered the market with a slew of channels with a flagship Hindi mass entertainment channel. Some have begun backward and forward linkages by getting into cable distribution and the cinema exhibition business. You, however, have chosen to operate in niche spaces with not much competition. What’s the strategy behind this cautious approach?

Ronnie Screwvala ( Photo: Abhijit Bhatlekar / Mint)

We have not been less aggressive than any of our rivals. We have rather been more strategic in the way we have moved. At the end of the day, any business is about creating more value and looking at exponential growth. Would we have achieved these goals if we had launched a dozen channels and a Hindi general entertainment channel instead of specific broadcast verticals? I don’t think so. I don’t see any winners emerging in that space. There are enough examples in the general entertainment space where no one has moved up on the value creation front in the past five years. One clear example is Sony (now known as Multi Screen Media Pvt. Ltd). In the heydays of 2000, the company got valued at $2.5 billion (about Rs10,575 crore now). Today, their value has come down to around $100 million. I can give you a whole list of examples where the falling off the cliff has been much more acute than the potential to make it big.