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Reliance Big Entertainment lays out a $10 billion game plan

Reliance Big Entertainment lays out a $10 billion game plan
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First Published: Tue, May 20 2008. 12 27 AM IST

Reliance Big Entertainment president Rajesh Sawhney
Reliance Big Entertainment president Rajesh Sawhney
Updated: Tue, May 20 2008. 12 27 AM IST
New Delhi: Starting with its name, Reliance Big Entertainment Pvt. Ltd has made no bones about its ambition to be one of the largest media and entertainment companies globally.
Mint QuickTake
Sharply underscoring billionaire Anil Ambani’s entertainment ambitions, on 18 May the company announced a splashy entry into Hollywood with a plan to “develop” films with George Clooney’s Smokehouse Productions, Tom Hanks’ Playtone Productions, Brad Pitt’s Plan B Entertainment, Chris Columbus’ 1492 Pictures and Nicolas Cage’s Saturn Productions, virtually the who’s who of the American movie industry.
Reliance is exploring around 30 projects, of which it expects eight to 10 to go into production over the next two years. While the production budgets will range from $25 million to $150 million (Rs106.5 crore to Rs639 crore), the company is projecting a revenue stream of at least $1billion through these films. But Hollywood appears to be just one element of the game plan. The company, which was valued at $1 billion after hedge fund investor George Soros invested $100 million for a 3% stake in the company in February, says it is aiming to be a $10 billion enterprise “soon”, according to president Rajesh Sawhney.
Reliance Big Entertainment president Rajesh Sawhney
The bullishness perhaps stems from getting a steep premium from a canny investor such as Soros even before any of the company’s ventures have really taken off in any significant way (Ronnie Screwavala-owned UTV Software Communications, with a much better track record so far, was valued at around $1 billion after Walt Disney invested $203 million to increase its stake in the company from 13.7% to 32.1%, also in February).
Sawhney, however, doesn’t see any incongruity in this.
“In the US, the media and entertainment sector accounts for 10% of the GDP (gross domestic product). The global average is around 6-7%. In India, the sector accounts for a mere 3-4% of the GDP. Clearly, it’s an opportunity that has not been exploited yet,” says Sawhney.
Sawhney’s larger blueprint includes plans for one of the largest broadcast networks in the country, the biggest portfolio of businesses in mobile and Internet gaming, social networking, classified portals, as well as movies and video rental services. And a presence in physical music and video distribution, besides making Hollywood and Indian films.
Sawhney says four to six television channels are likely to be launched before year-end but refuses to elaborate. Meanwhile, a well-known editor of a leading news channel confirms, on the condition she isn’t named, that the company is quite serious and approached her recently to lead their news project.
Sawhney’s growth plans are distinct from the film processing and exhibition business held under a listed entity, Adlabs Films Ltd. They also include Big FM, the largest network—currently 44— of FM radio stations. While Sawhney wouldn’t comment, some company insiders say the long- term Ambani vision is to bring all media and entertainment businesses under one umbrella.
In an interview with Mint conducted in person and over email, Sawhney discusses the opportunities and the challenges that await Reliance Big Entertainment. Edited excerpts:
Hollywood is an industry dominated by studios significantly bigger than Reliance Big Entertainment. Do you really see a meaningful opportunity for yourself in that market or is it simply a big announcement that needed to be made to justify your ambition to be a big media and entertainment player?
It’s a serious commitment we have made. It’s a determined and well thought out move. Indeed, we want to be a global player in the media and entertainment space. We see a huge opportunity in world cinema over the next 10 years. One way to exploit this opportunity was to tie up with some big Hollywood studio or enter into some kind of partnership with them. We didn’t want to do that for it wouldn’t give us the kind of presence we wanted to have in the space. We are serious about a significant presence in the global cinema business. So we chose to take an innovative route. This deal will help us create a virtual studio without having to take on the biggies in Hollywood. We will provide development funds to the production houses in question on various projects. We will seek India rights for their distribution and exhibition in India.
What’s the kind of revenue potential you see in such deals?
Currently, we have talked about some 30 projects. We hope that at least 8-10 of these will get into production stage over the next two years. We haven’t discussed the budgets as yet but typical Hollywood budgets range from $25 million to $150 million. We should be in that bracket as well. We see a revenue potential of at least $1billion from these 8-10 projects.
Will films be the route to the big media and entertainment presence the company is seeking?
Films will be an important route. We remain committed to the Indian cinema business as well and this includes both Hindi as well as regional cinema. We aim to produce 69 films over the next two-and-a-half years. Of these, 22 will be in the regional space. Regional markets are an area of focus for our broadcast venture as well.
Isn’t the broadcast venture taking too long to shape up? Other players, such as Network18, UTV Software, have moved pretty fast in the past two years and they may consolidate their position in the market by the time you come in?
Launching first is no measure of one’s success. The broadcast business today involves several challenges. Besides good content and aggressive marketing, a solid distribution strategy is a must to ensure a long-term successful play. Agreed many new channels have been launched in the past two years, but how many markets are they available in? How many people are watching them? We don’t want a scattered or a limited presence when we launch. We would want our distribution strategy to be in place before we enter the market.
Yet, we have sought permission for launching 20 channels. We hope to have at least four channels up and running by the end of this year. Hindi and regional movies and music channels are our priority. General entertainment space is crowded, yet we see an opportunity for a differentiated quality product. Sports and news are also interesting areas but we have not firmed up any plans yet.
Twenty channels for starters seems like an audacious attempt. Do you see space for so many channels in a market already so crowded?
The problem is the industry is quite scattered right now. There are no players with a pan-India presence and a brand that transcends the entire media and entertainment space. Reliance Big Entertainment is seeking to occupy that space with its films, broadcast, new media and other allied businesses.
Any plans to enter the print space? There was a buzz that Anil Ambani had evinced interest in Mid Day and now, seems to have set his eyes on The Telegraph?
Buzz and big companies go hand in hand. As far as I know, there is nothing on the drawing board as of now. Also, print is a different ball game.
The George Soros episode was largely seen as an exercise to get a hefty valuation and then, go for a big bang listing. Any such plans on the anvil?
Nothing in the immediate future.
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First Published: Tue, May 20 2008. 12 27 AM IST