New Delhi/Mumbai: More than 20 years have passed, but Essel Group promoter Subhash Chandra still vividly recalls the scene in the boardroom of Richard Li’s Hong Kong offices, where he had taken his team along for a meeting with Li and his executives.
After a heated exchange with his own team, Li, son of Hong Kong tycoon Li Ka-shing, rejected outright Chandra’s proposal for a joint venture to launch an Indian language channel.
The year was 1991 and Li had just launched a media and entertainment business in Asia under the HutchVision banner with four satellite television channels—Star TV, BBC, MTV and Prime Sports.
Li’s argument was that there was no money to be made in broadcasting in India, Chandra recalled on Wednesday in a phone interview from the US, where the chairman of Zee Entertainment Enterprises Ltd is on a visit.
That was hardly a propitious start for India’s first private television broadcaster. Nonetheless, Zee overcame that initial rejection, survived, grew and will turn 20 years old on 1 October.
There was more humiliation to come at that meeting with Li. Chandra, a rice merchant from India who ran a packaging unit and an amusement park back home, changed tack and asked Li to let him lease a transponder on his satellite AsiaSat.
“He asked for $5 million (around Rs.26 crore today) a year for it. I had made many trips to Hong Kong in the last 10 months. It was close to Christmas and I was desperate. I agreed to pay $5 million only if he signed the deal immediately,” Chandra said. “The HutchVision team went into a huddle and Li emerged after an hour only to turn down my proposal.”
Li did sign the deal with Chandra a few months later in India, and the rest, as they say, is history, with Zee pioneering the Indian cable and satellite television industry. Li had approached several Indian media groups and business houses, but not one was willing to pay $5 million for a transponder.
“Subhash Chandra was the last man standing,” said Sid dharth Ray , a former Star TV executive who was then working with the Sanjay Dalmia group, also in the race for satellite space. “He took the biggest risk and wrote the Indian broadcasting story.”
A story of many firsts
To clinch the deal, Chandra had to not only arrange money from his non-resident Indian friends, he also had to enter into a joint venture called Asia Today Ltd with Star TV for the transponder because the laws didn’t allow him to lease it outright.
Karuna Samtani, an ad film-maker who was the first employee to be hired by Zee, said the transponder deal was signed in April 1992 and the television channel went on air on 1 October.
“The channel that began with three hours of original programming went to six-hour programming a day in three months,” said Samtani, who was responsible for content.
Zee became a 24-hour entertainment channel within a year of its launch and remained the market leader up until 2000, although several other channels had gone on air in the interim.
Chandra’s broadcasting business has many firsts to its credit in terms of programming, distribution, regional content and global expansion.
“During the first 10 years, he came to be known for his innovativeness,” said Sandeep Goyal, an advertising professional who was Zee’s chief executive officer (CEO) in the early 2000s.
For a start, the channel created its own pool of producers. “We did not use Doordarshan producers,” said Samtani, who identified fresh talent such as Raman Kumar, Tony and Diya Singh, among others.
“The creative was outstanding. As the channel grew, it developed good shows like Tara, the story of a new-age woman, or India’s first television cookery show, Khana Khazana. Its in-house shows such as Antakshari and Sa Re Ga Ma Pa were also big hits,” said Goyal.
By the time Sony Entertainment Television launched its flagship Hindi channel in 1995, Zee had already created a cable and satellite market of 11 million homes, according to Kunal Dasgupta, a former CEO of Sony.
Besides, the company had launched a flanking entertainment channel El TV with regional language programme bands, as well as Zee Cinema, a pay-TV film channel, before Sony’s entry.
Setting up a cable distribution network under Siti Cable was another first for Chandra’s company.
“He had the vision to foresee that India would not remain a 12-channel market forever. To surmount the issue of ‘placement’ of his channels in cable homes in the future, he decided to have some control over this pipe or cable,” said Sunil Khanna, the company’s first distribution head, appointed in 1993, who worked in different capacities in the organization before quitting in 2004.
Advent of the MSOs
Since the Gulf war in 1990 and the Star TV launch in Asia in 1991, several thousand mom-and-pop cable distribution businesses had come up in the country. The challenge was to consolidate without upsetting them.
Siti Cable was set up to supply satellite channel signals from a powerful master control room to the last-mile operators.
“The innovation was that wherever Siti Cable went, it went with a local cable channel for the benefit of the viewers. The first control room was set up in Vijayawada, where 170 of the 200 cable operators joined us,” recalled Khanna.
That marked the advent of MSOs, or multi-system operators, in the country.
Interestingly, the Canadian consultant hired to design the network had suggested that Siti Cable launch in two cities to test the viability of the business.
“But the moment the consultant proceeded on Christmas vacation, Mr Chandra networked 30 cities at once,” Khanna recalled.
Again, although Star had been trying to set up a direct-to-home operation in India, the Zee Group beat it to the launch with Dish TV.
With the same alacrity, Chandra expanded in overseas markets. Today, Zee is seen in 120 countries worldwide although it is targeted only at the Indian diaspora. Even the CEOs of rival firms admit that Zee operates the most robust international operation among all the Hindi general entertainment channels (GECs). Currently, the overseas business contributes 25% to Zee network’s profitability.
The company has also entered regional language markets with a clutch of channels.
Unprepared for change
But somewhere along the way, starting in 2000, Zee started losing the plot, according to its critics. The game-changer was Zee’s buyout of Star TV’s stake in Asia Today that allowed Star (purchased from Richard Li by Rupert Murdoch in 1993) to create Hindi programming.
“Zee was a giant company that failed to recognize that there can be change,” said Ashish Kaul, a former executive with the channel.
He remembers a meeting where the chairman asked people in his room for their opinion on Kaun Banega Crorepati (KBC), which was on offer. “Even Kahani Ghar Ghar Ki was offered to Zee. We made the wrong choice,” said Kaul. Both the shows were grabbed by Star Plus, the Hindi GEC set up by Murdoch.
“Star made some dramatic moves, a quiz show during prime time, followed by soaps,” said Sameer Nair, former a CEO of Star India Pvt. Ltd who was responsible for the programming that catapulted Star Plus into the lead. “It was a lethal combination that worked in our favour. Viewers wanted something fresh and different from what Zee and Sony were offering at that time.”
A weak attempt was made by Zee through Sawaal Dus Crore Ka to counter KBC. The programme flopped. “We thought people were watching KBC for money, which was not true. We failed to understand our viewers,” said Kaul.
Meanwhile, competition in the regional channel segment also intensified. Hyderabad-based media group Eenadu launched several vernacular channels under ETV, which gained traction initially. Over the years, Star India also expanded regionally and some of its language channels are market leaders.
Even on the programming front, rival channels such as Star Plus, Colors and Sony have been at the lead of the buzz-generating new formats Fear Factor (Khatron Ke Khiladi) or Bigg Boss fashioned after Big Brother.
There is now a three-way battle among Star, Sony and Colors for television rights to blockbuster films. Salman Khan’s Ready and Dabangg went to Colors, while Rockstar was won by Star.
While Zee’s attempt to create the Indian Cricket League flopped, the Indian Premier League telecasts on Sony have been successful.
On the other hand, Nair says Zee has introduced native content, which was always the channel’s strength.
“It was a slow recovery, but Zee got back into the groove with its serial Saat Phere. Its performance as a GEC has been stable and the new logo has also helped,” he said.
Former Zee CEO Goyal said Chandra’s son Punit Goenka’s ascension to the CEO’s post in 2010 brought stability to the broadcasting business. Goenka was first inducted in the group in 2004 and trained with then CEO Pradeep Guha.
Goenka recalls: “We are at 92 GRP (gross rating points), the chairman (his father) told me. You cannot perform worse than that. Go run the show now.”
Asked how he would bring about a change in his first review meeting, he recalls saying: “Very painfully and slowly.”
Last week, at a GRP of 235, the channel was No. 2 after Star Plus, with a GRP of 252. “So definitely from there to now, the journey has evolved a lot more,” Goenka said. “It is a good feeling to be part of something successful and having built it with my team from nothing to where it is now.”
For the fiscal year 2012, the company’s net sales were marginally higher at Rs.3,040.5 crore than in 2011 at Rs.3,008 crore, although net profit declined from Rs.636.9 crore to Rs.589.1 crore.
Shashi Sinha, CEO of media buying agency Lodestar UM, said viewership ratings fluctuate, but to remain an Indian company while most other GECs have foreign partnerships is remarkable. “Subhash Chandra has built a national channel and stayed afloat as an Indian company all through its expansion,” he said.
But will it remain an Indian company? “There is a famous quote my chairman (Chandra) once used, I can only repeat it—‘India is not for sale’. So I don’t see it happening as of today,” said Goenka.
According to Chandra, the company is on a mission to increase the current global viewership of Zee from 650 million to more than one billion in the next five-seven years.
“For that, we cannot remain a South Asia-focused company any more. We have to start looking at the main stream audiences outside,” said Goenka.
The company has already launched two Arabic channels. The other geographies being explored are Russia, Malaysia, Indonesia and Africa.
“We haven’t chalked out the next 20 years’ plan, as that will be only an Excel sheet exercise. It is a dynamic industry,” said Chandra.