great  post highly informative now if we correlate this article to the compnies i see a list of potential winners like this tv18,adlabs,zee post  spin off especially the siticable part,balaji and sony ent ipo awaited content providers both and enil in radio

Just six years ago, India's largest listed media company was a bundle of misery. Ever since its inception in 1992, we have been tracking the fortunes of Zee Telefilms, but never had we seen it hit a lower point than it did in 2000. It had lost four CEOs, its television business was a mess, its cable operation was stagnant. The media empire that chairman Subhash Chandra built had acquired the reputation of being a 'management hotspot', a political, insecure kind of place where no one of ability wanted to work. First Sony, then Star attacked it and took away its leadership position in broadcasting. Its share price crashed, wiping out billions in market capitalisation (see 'Planning A Comeback', BW, 4 December 2000).

In the subsequent years, the first Hindi satellite broadcaster just could not get its act together. It ran through three more CEOs, its programming sank lower and Siti Cable continued to languish. Even India's first DTH (direct-to-home) service, which it launched in 2003, was largely ignored. Real DTH, everyone said, would begin when Star joined the fray. A trip to meet someone at Zee was usually a sad experience. The moment you walked into the closed, claustrophobic office, you knew you were meeting a team of well-meaning people who did not seem to be getting anywhere.

Walk into the Zee Telefilms office at Worli in Mumbai today. There is an airy, light feeling, as if the windows have been opened after many years. The same people we have met over six years are an excited lot. The place is bursting with positive energy as everything — broadcasting, cable, DTH, sports, regional languages and every other business — falls into place. At Rs 1,423-crore, Zee Telefilms looks and behaves like India's largest listed media company. "It is like somebody has put incense oil and lit a flame below. The company feels and smells good," laughs Irshwin N. Balwani, business head, Zee Muzic.

It sure does. On the back of shows such as Saat Phere and Kasamh Se, ratings are up and yields per 10 seconds have doubled. This has lifted advertising revenue growth to 43 per cent, up from 10 per cent in the previous financial year, according to estimates by Hong Kong-based consulting firm Media Partners Asia. From No. 3 in the Hindi general entertainment stakes, Zee TV is now a clear No. 2, ahead of Sony. Between 8 p.m. and 10 p.m., Indian prime time, it battles Star Plus rating point for rating point. "They (Star) have had a six-year dominance. We sure as hell will try to break that," says Punit Goenka, director (and Chandra's son). "We don't want to remain No. 2 for too long," echoes Pradeep Guha, CEO.

This aggressive feeling is not limited to broadcasting. There have been a string of acquisitions, joint ventures and deals — UNI, Ten Sports, RPG Netcom and Diligent Media Corporation (the joint venture with Dainik Bhaskar that prints DNA) — among others. Alliances such as the one with Ten Sports will have an immediate impact on topline.

Chandra is now breaking his company into four parts to build a bigger, stronger 'sum of parts'. The demerger of Zee Telefilms, which will be operational soon, will create four separately listed companies: Zee Telefilms (broadcasting and international), Wire and Wireless India (WWIL, cable), Dish TV (DTH) and Zee News (ZNL, news and regional channels). Each will be raising capital for growth. The total capital being raised over the next five years — about Rs 1,500 crore. And their joint revenue target — Rs 12,000 crore by 2011 (more on this later).

In November came the seal of approval from the stockmarkets — Zee's market capitalisation finally hit the same figure that analysts at Merrill Lynch, New York, had attached to Star India in October 2005 — $3 billion. Chandra's company, it seems, has finally got its act together. What happened? "The only visible thing that has changed is that our flagship channel has revived," says Rajiv Garg, CEO (corporate strategy and finance), Essel Group (Zee's parent).

Its rub-off effect is being used to break up the company and raise capital to fix the subscription-driven businesses. Notice that all the big investments from now on — about Rs 1,500 crore in all — will happen in pay TV systems such as cable and DTH. There is no major capex planned for the content businesses.

The ability to sustain this success and to leverage it to become a bigger company will, however, need a management depth and maturity that Zee has for long been accused of lacking. So, have Chandra and Zee indeed matured enough to take that big leap? "Contrary to expectations and in spite of whatever I had heard [before joining Zee], Mr Chandra did not interfere [with whatever changes he made at Zee]," says Guha. Coming from a man who has just completed two years at a company notorious for losing CEOs within a year, is that sign that the turnaround is not a flash in the pan?

What's Working

Chandra maintains that Zee's "strategy was never wrong, only execution was poor. There were no systems and processes, everything was individual driven. When the channel and company were doing well, many things were wrong but no one noticed". To fix that, he got Guha, former president of Bennett, Coleman & Company (BCCL), and Goenka to join the Zee TV team in January 2005. The putting in place of systems and processes is the first of two changes that the duo made.

Earlier each channel operated in a silo with its own revenues and costs. Now, however, the 23 domestic channels operate as a network. Take Zee Cinema. It had been a star in the Zee portfolio for over three years (it brings in the largest share of profits after Zee TV). Much of its strengths came from its understanding of movie-watching behaviour. Bharat Kumar Ranga, executive vice-president in charge of Zee Cinema (among other channels) points out that most viewers watch an average 20-22 minutes of a film. Contrary to popular perception, they prefer breaks. "Consumer behaviour at home is different from the theatre," he says. That is because India remains, largely, a one-TV market. Films are watched along with other people. "Even in two- and three-TV homes, the atmosphere is of a one-TV home," says Ranga. Nuggets like these were never utilised by the network. But now this understanding of movie-watching behaviour has meant that the Zee Cinema team does the film programming for Zee TV and the entire network.

The second change is more subtle. Neil Chakravarti was an investment banker with JP Morgan in London when Guha and Goenka bumped into him a couple of years ago. Guha offered him a job on the spur of the moment and Chakravarti accepted. This non-TRP man is now vice-president in charge of English channels Zee Café, Zee Trendz and Zee Studio. These channels are extremely difficult to push in a mass-entertainment driven cable scenario. The idea is to keep building them till pay TV systems take off. Even three years ago, Zee would not have committed resources and people like Chakravarti to building the business. "Earlier, it was a very cost-centric approach, now it is an investment-centric one," says a senior manager. Earlier this year, the entire creative team was taken on a film appreciation course to FTII. "This has never been done before," says Sanghamitra Ghosh, executive vice-president (HR), who has been around for over five years.

This focus on investing in people, programming and businesses comes with more questioning. For instance, the key result areas (KRAs) of most programming people are now linked to TRPs. There is a calendar of meetings for senior people devised by The Hay Group (an HR consultancy). They have to meet every few weeks irrespective of which part of the world they come from. This adherence to processes and systems has been Star's biggest strength, whose executive committee meets with Hong Kong every Monday. The team from Hong Kong comes to India every month and so the system goes. Because the top guys are always in touch with each other, coordination and communication is much better, so are responses to competitive situations.

"I think the biggest change has been stability," says Goenka, who seems very much his own man. "The company had seen four different heads in quick succession. Performance was affected because people did not want to take decisions." Now, "there is a lot of positive energy, every success is celebrated", says Nitin Vaidya, executive vice-president, Zee Regional Channels. For example, if Zee Marathi wins an award, a mail is sent out to everybody from the chairman. The result is a culture that encourages people to think and voice ideas and systems that ensure that these ideas do not get lost. "There is an openness that Guha and Goenka showed. They clearly want people who can think out of the box," says Chakravarti. Attrition, a huge problem at Zee, is showing some signs of slowing down. From 36 per cent in 2004-05, it has come down to 24 per cent in 2005-06. Ghosh expects it to steady at 12 per cent in the next financial year.

These changes are being dovetailed into some of the tougher ones. These are the steady raising of ad rates, the launching of several new international (such as Zee Arabiya) and Indian channels (such as Zee Tamil), and the investment in sports. The biggest bets, however, are on what the demerger could do. The first restructuring discussion happened in 2005, says Garg. The idea was to free all the other businesses from the vagaries of the broadcasting one. Cable, DTH, news and regional channels, and broadcasting all have different regulations and foreign investment norms. "It was evident that the content business would drag down the other ones such as Siti Cable (WWIL)," says Goenka. Now, if WWIL wants to raise money, a couple of rating point drops in Zee TV will not affect its valuation.

If the demerger works, it opens the floodgates for subscription revenues, the biggest potential upside in the Rs 20,000 crore-odd television broadcasting business. These have so far been the weakest link in the chain for all broadcasters including Zee. Of the Rs 12,000 crore-odd collected on the ground from 71 million cable homes in India, just about 15-20 per cent comes back to broadcasters against 50 per cent in more robust pay TV markets (this does not include DTH revenues). Though they want a slice of the market, foreign investors have been chary of the unorganised and fragmented nature of the business. So, in spite of being allowed to own 49 per cent in a cable company, most have stayed away. Nor have broadcasters and cable companies found it worth their while to invest in installing digital set-top boxes, which would bring addressability and, therefore, more pay revenues (see 'Choked', BW, 16 May 2005).

Saat Phere/Zee TV The travails of the 'dark girl' has captivated Indian audiences, handing Zee key rating points

Today, "there is a powerful pull from the ground forcing us to do digitisation", says Jagjit Singh Kohli, CEO, WWIL. DTH and the threat of IPTV have put cable networks in a state of panic. Their networks are already broadband-enabled. Kohli points out that several broadband operators (Sify, Tata, Reliance) use the cable pipes combined with Ethernet to ride into homes. WWIL is using this state of physical and mental readiness among last-mile operators to gain control over homes directly. It has acquired, at roughly Rs 1,500-Rs 2,000 per home, controlling stakes in seven non-metro MSOs, who have access to 250,000 subscribers. The target is to control, directly or through franchisees, 9.6 million STB-enabled homes by 2011. The cost: Rs 830 crore as of now. And the targeted revenues: Rs 3,770 crore. Even if WWIL acquires 7-8 million direct subscribers, its ability to command a valuation of $100-$200 per subscriber from a foreign investor goes up, reckons Dinyar Contractor, editor, Satellite & Cable TV magazine.
Remember, everyone from John Malone's Liberty Media to Time-Warner have their eye on this market. At a minimum of $100, even a 20 per cent sale of stake in a network with 10 million homes could bring in about Rs 1,000 crore.

Now factor in the impact of rising pay TV numbers, either through DTH, HITS (Headend in the sky) or cable, on the content business. Control over the last mile means a better share of revenues and the ability to price channels such as Zee Café differentially (though regulation does not permit that yet). "We have not even scratched the surface on subscriptions," says Guha. Agrees Arun Poddar, CEO, Zee-Turner: "Three years down the line, people will forget the last 10 years of broadcasting. Subscription will become the mainstay."

The Chandra Factor

Even Chandra's worst critics admit that he is a visionary par excellence. The plan is just proof of that. He spots businesses and bets on them long before his bigger rivals. Unlike Star or Sony, Zee has a robust regional and international broadcasting business. If you take Fun Republic (into multiplexes) and DNA into account, Chandra owns, along with Kalanithi Maran's Sun TV, one of the best portfolios of media assets in India. But the execution is not always as good as the vision. "When I look at some of the (research) papers from 1993, I feel strongly that we were headed in the right direction, but didn't carry our decisions through well," says Chandra. For instance, Zee did the first experiments with a Bangla language programme in 1992. "We should have launched a Bangla channel by 1994, but the CEO then did not," says Chandra. Ditto for Tamil. "We made a mistake in the hiring of CEOs. That cost the company a lot in terms of perception. Things settled down once Goyal [Sandeep Goyal, the CEO just before Guha] was asked to leave," goes on Chandra. (When contacted by BW, Goyal declined to comment.)

The results, especially on the flagship channel, are proof that Chandra is letting his CEOs be. It explains why the same team, most of who have done an average of 7-9 years at Zee, has performed. "I had a far more dismal picture of Zee from the outside than when I came in. I found the people to be very good. I have hardly hired any new people," points out Guha. Chandra still wields tight control, though. He also has a reputation for not liking it if the CEOs become the stars. Almost every former CEO has said that to us. At a meeting of top managers a couple of weeks ago, several requested him to decentralise decision-making some more. Says the head of one business: "Even today, any decision I make has to go through him. Everything is going right for the company, but it has to get out of the ownership trap." Chandra denies that he is very hands on, now. "If I notice something I do inform them. It is up to them to take action," he says.

Adhuri Ek Kahani/ Zee Marathi The channel brings in the most revenues among all of Zee's regional channels

You could argue, of course, that some of the best media companies in the world are driven by owners — Sumner Redstone's Viacom or Rupert Murdoch's News Corporation, for example. "It is a good blend of owner and professional management that works," says Jawahar Goel, business head, Dish TV and Chandra's brother. If Guha's job was to put systems and processes in place, he has done that. Now it is up to the chairman to respect them at an operational level. That is what a Murdoch or a Redstone does. So maybe all that was needed — the right balance of Chandra and a professional CEO — is already there.

The risks are evident — a five-point drop in ratings or a 20 per cent one in share price could easily derail the transformation process if it is not yet part of the company DNA. Also, remember that Zee has surged ahead in a year when both its competitors had their eye off the ball. The internal politicking at Star (see 'Beyond Broadcasting', BW, 8 May 2006) and Sony's problems with its investors made things easier for Zee. But as Vivek Couto, executive director, Media Partners Asia, points out, "You can hit an 800-pound gorilla (Star), but you haven't yet felt the 800-pound gorilla hitting back." The other risks: "CAS might not take off, DTH may not become as big as estimated," rattles off Couto.

The Goenka Factor

The biggest risk, however, is in the question floating within and outside Zee these days. Who is responsible for the turnaround, Guha or Goenka? It typifies Zee's paradoxical existence as an owner-driven, professionally run company. "It is no credit to any one person. It is to the credit of the whole team. Punit and Pradeep work as a team," says Chandra. Goenka, who makes no bones about the fact that he is the owner's son, says he is answerable only to shareholders. He is clearly comfortable with Guha professionally, a thing that his father may not have shared with Zee's former CEOs. (Guha and Goenka knew each other before Guha joined Zee). So, this nextgen at Zee (everyone talks about Goenka being Chandra's successor) is ostensibly more comfortable with professional management than the entrepreneur.

What about the professionals? Remember Vijay Jindal, the only CEO who stayed around for five years and brought order to the wild west that Zee was in the early 1990s? Jindal, incidentally, was a BCCL man. Does it say anything about Guha and Jindal's special ability to work in owner-driven companies? Maybe it does. Maybe Guha knows where to push and where to draw the line. And that is why he was reluctant to talk to us or anyone. Maybe that is why the changes he has made will be more lasting. What happens to Zee when he leaves (there are rumours flying around already)? "The momentum won't go if I leave. I am very focused on building systems and processes," says Guha.

If Zee grows as per schedule even after he leaves, then both Chandra and Guha would have done their jobs. Till then, the jury is out on the strength of the turnaround.

ZEEL I would preseume is the most exciting. As for the others they are yet to get listed.

25% - 30% at least is what I would like to bet on!!!