India first — it does not matter what Subhash Chandra does, but every initiative and decision of the chairman of ZEE and Essel Group has played a role in putting India on the global map. Seeking a strategic partner for Zee Entertainment Enterprises (ZEE) is yet another approach that, on completion, will realise a similar result.
Earlier this month, ZEE promoters announced they are opening up 50 per cent of their stake in the company to bring in a strategic partner. At present, promoters own 41.62 per cent of shareholding — the stake up for grabs, hence, is just over 20 per cent in ZEE. Given that at present, ZEE is India’s largest media and entertainment business by market cap, this is no small deal.
Combined with the fact that India is one of the most lucrative emerging markets, where all media including traditional such as TV and print are still growing, this development will attract every serious global media player’s attention. “By 2055, India will become a $100-trillion economy and No. 1 globally, because the demographics are in its favour. It will surpass China and America and that will be hell of a lot for any kind of business,” predicts Chandra, reminding, “Technology will change the business.” This is evident in the fact that unlike most other markets, India is still adding new television and digital audiences, with the headroom for growth of the latter being much more pronounced.
The Right Match
ZEE’s decision to trigger this deal comes from an international media company’s interest in acquiring Zee5, the six-month-old digital asset of the company. In a short span of time, the OTT video streaming app is already sitting at 500 million subscribers, as per company sources. Chandra is confident this number is set to grow further.
Media companies are perhaps more obvious in Zee potential suitors’ list. The blurring lines between media and technology companies as the fearsome five — Apple, Amazon, Microsoft, Google and Facebook — earmark billions in content development and acquisition, adds more to this list. Yet another segment that would be evaluating this opportunity seriously is India’s own tech and telecom players such as Jio.
ZEE is very clear on what it seeks in what it calls a once-in-a-lifetime partnership. It has lined up Goldman Sachs and LionTree as international strategic advisors to identify the right candidates. ZEE both understands and appreciates its strength in content creation.
“Our company’s content capability is not replicable. Any media tech company operating in India is in a very niche segment. They at best cater to 1-2 per cent of this country because their content spread is restricted to 90 per cent international content and 10 per cent domestic. India’s content consumption pattern is towards their own preferred language. Zee5 has over 55 per cent content in regional languages already. ZEE’s attractiveness is its inherent capability to create local content,” explains Punit Goenka, MD & CEO, ZEE.
ZEE, therefore, is keener on a global technology player that does not have India footprint as yet. The other clause that will work for the potential ‘groom’ is assistance in breaking through geographical barriers to augment ZEE’s international footprint. The combination of content creation and technology, buoyed with international availability, would truly be match made in heaven. That is the ideal marriage ZEE believes will arm it to thrive in the next decade.
The Media & Tech Intersection
“We must reskill,” says Chandra, explaining that due to the likes of augmented and virtual reality, there will be convergence of screens. “It will not be just an audio-video medium but a full-fledged market,” he points out. Chandra, Punit Goenka and Amit Goenka, CEO, International Broadcast Business and Z5 Global, have unanimously and repeatedly stated that the prime driving force behind this move is to find a partner that can truly make ZEE a “global media company”.
This ambition needs to be understood in the context that ZEE already is the only media company of its size that is born in India, and present in other markets. With over 12 international language services, ZEE has 1.5 per cent market share in a mature market like Germany; produces 30 minutes of original Russian content and two-hour per week content in Arabic language in the Middle East. “We are at 1.3 billion viewers already,” asserts Amit Goenka, adding, “But to go to the next billion, a strategic global partner is needed.”
Punit Goenka reiterates the need for the right tech partner. “Zee5 is already our third attempt in OTT; the earlier two did not fare as well as we would have liked. Our objective is to make ZEE as a mainstream global media company.”
This media and technology intersection will ready the once satellite-only general entertainment broadcaster to face the next decade, competing on a global stage. ZEE’s commitment to this goal is seen further in Punit Goenka’s statement that should the new partner seek to run the company by a professional management team, the option would not be a deal breaker.
ZEE ambitions are set much higher. “I am tired of people saying companies with deep pockets come to our country to compete with us. I want to go compete with these people wherever they are now in whatever small way I can. I want people to say that this is the first media company from an emerging market that has given us competition,” says Punit Goenka.
Should all indeed fall as per ZEE’s plan, the company will give India’s its own global media conglomerate.