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The curtains appear to be dropping on Zee founder Subhash Chandra’s family control of the showbiz company that led satellite TV’s penetration of India and is now grappling with an online market shift. On Monday, Zee Entertainment Enterprises Ltd (ZEEL) declared that two of its largest shareholders—Invesco Developing Markets Fund and OFI Global China Fund, which together hold nearly 18% of its shares—had called a special shareholder meeting for the ouster as director of its chief executive Punit Goenka, the founder’s son who stayed in charge after the family offloaded most of its equity in a 2019 debt-reduction exercise of its parent Essel Group, which had expanded into infrastructure and found itself strapped for cash after shadow-lender IL&FS caved in. The family’s stake went down from over 40% to just around 4%, but institutional investors were happy to let Goenka continue to run the company. It is unusual in India for mutual funds to turn assertive as shareholders, and so Invesco’s move has attracted attention. It’s unclear if Invesco’s bid to reconstitute the board will receive adequate support from other shareholders. About 58% of ZEEL is owned by foreign portfolio investors. Investor guidance from two prominent proxy advisory firms has backed the move to rejig the board. Foreign institutional investors, which tend to disclose their voting in such matters, will be mindful of both future returns as well as perceptions. It remains to be seen if the Chandra family will be able to rally shareholder support and defeat the Invesco move.

Should Chandra’s family lose its last bit of control over ZEEL, it would mark the end of a remarkable chapter in India’s history of media entrepreneurship. He spotted a chance to deliver fare unseen on Indian screens and built an empire with more than 40 channels being beamed across the subcontinent and beyond in 11 languages. Goenka has been part of this story. Going by ZEEL’s financial results, it’s hard to argue the company was badly run. Covid crunched its ad revenues last fiscal year, as it did of other media companies, but its net profits did not suffer. Its latest quarter had no sign of distress either. Its stock price, though, is a different matter altogether. It’s down 55% since Invesco picked up a 9.4% stake in July 2019, even as the broader market soared. To be fair, the pandemic has disproportionately impacted media companies, as advertisers tend to slash budgets in a slump. The whiff of a change in control has revitalized the stock, which rallied 40% on Tuesday. While it may be tempting to see this as markets cheering Goenka’s potential ouster, part of this upswing could well be fuelled by speculative trading. The market also perhaps believes that the logical conclusion of a potential takeover of control by financial investors could be an eventual sale to a strategic investor at the right price.

It could be argued that the company hasn’t exactly shone in its digital pivot. Its online streaming app Zee5 is up against big apps like Netflix, Amazon Prime, Disney-Hotstar and Sony-Liv. While in the broadcast market Zee is a formidable contender, in the OTT space, it’s a bit of an also-ran. Zee has experimented with a pay-per-view mechanism for blockbuster offerings. The results of this remain unknown, but it’s clear that success in streaming will be crucial for entertainment players from the TV era. Fortunes could still turn on the appeal of novelty, no stranger to Zee in its early days.

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