THE SURVIVOR

IIPM set to beat economic slowdown

Once constantly under attack for all-too-easily giving up his first mover advantage in the Indian satellite television sweepstakes, Subhash Chandra nevertheless deserves accolades for the manner in which he has retained reasonable profitability compared to peers, against changing dynamics of traditional media businesses, stiff competitive onslaught and ever-demanding consumers. What sets him apart is his completely unique way of doing business. Will he survive the new threats to his empire, asks Pallavi Srivastava

Even as senior creative honchos at Zee vent their feelings with perhaps a twinge of wistfulness (and jealousy toward their carefree money-burning counterparts at rival Star), the utter uselessness of this ‘hot discussion topic’ was not lost on them. They knew that they could discuss and debate all they liked, but Zee head honcho Subhash Chandra Goel, with his trademark salt n’ pepper savvy hair-do and a legendary business acumen to match, would not ever dream of allowing such ‘grotesque wastage’ of money. Today, those very same creative types (now employed elsewhere of course) can’t stop praising Chandra’s low-cost training, especially in the present economic gloom. “Though it was a forced training for us, but it was good training indeed. I learnt the basic fact that you don’t need mega budgets to make a show hit,” reminisces Vivek Bahl who was a part of the Zee creative team in 2005, working on shows like Saat Phere, Dulhan, et al before he left to join Star Plus. He’s now Senior Creative Director, Star Plus and Star One. Ironically, to ride the present downturn (with steep falls in future advertising revenues indicated), even Star is now picking a leaf out of Chandra’s low-cost model and giving it an energetic heave-ho. That perhaps is the primary reason why its top show Bidaai… is made at a significantly lower cost compared to Ekta Kapoor’s high budget K-soaps that have now unceremoniously been taken off air.

In an interview with 4Ps B&M, Chandra admits proudly: “Essel group never believes in over-doing things.” He goes on to preen about how new GECs launched last year are operating on a high cost model–spending big money on programming, human resource and marketing–that translates into longer time period to survive on internal money before they break even. His assessment is not too far from the truth. Viacom 18’s Colors that has nearly displaced Zee from its number two position in the GEC space has spent Rs.150 crores only on marketing and distribution. As per estimates, just the programming budget of the channel is over Rs.500 crore for a year! While on the face of it, the model does appear high-cost, yet Colors has benefited. Within just three months of its launch, Colors replaced Zee from the number 2 spot in the Hindi general entertainment space.

But tell that to Chandra and he remains unfazed. “We will not fall for this high cost model trap. We would keep our heads down and let the storm pass,” avers the protagonist of Zee’s success saga. And a true-blue, self-styled protagonist he is! Unlike his peers, he’s never really been in the TRPs rat race; instead preferring to stick to his own business model, which has made him a billionaire over the decades; and he makes sure that his key people maintain the same zeal. Echoes Barun Das, CEO, Zee News Ltd., “There’s no point going for the rat race of hyped TAM ratings if you are unable to make profits.” Chandra’s eyes are always on the bottomline - be it the short, medium or long term outlook. According to an equity analyst, despite being at number four or five in the Hindi news category (in terms of TRPs), Zee News is one of the two channels in the category to make profits. It is Chandra’s low cost model only that has enabled his regional channels like Zee Telegu and Zee Kannada to break-even in less than two years, when the average break-even period for a channel is minimum three years.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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