KOLKATA: Over the years, Zee Entertainment Entertainment Limited (ZEEL) has ruled the Indian pay-TV ecosystem. A slowing economy, the arrival of new entertainment offerings along with challenges at the promoter level had compounded the difficulties for the network. But as they say “the show must go on”, ZEEL continued its operation without minimum interruptions. The network which has been always in the range of 16-18 per cent despite all hardships is now aiming to take over “one quarter” of the country’s viewership.
A road to growth and recovery:
During a session at MPA’S second leg of APOS 2020, ZEEL MD & CEO Punit Goenka spoke about the goals he has set for the next few years. It is no wonder that its rising digital business acquires a major space in its strategy where Goenka sees a potential of the 4x-5x rise in revenue in the next four years. But that is not overpowering ZEEL’s core strength i.e. domestic broadcast business. “My target in the next two-three years is that I want to own one-quarter of viewership of this country,” Goenka stated.
The regional markets hold the potential to make ZEEL achieve this target. In many markets, ZEEL reaped the benefits of being an early mover. It has been able to get eyeballs in other markets too. Its newly launched Punajbi GEC channel made it to the top in terms of viewership in just three months. Goenka reiterated his belief in the regional market - “I do believe there is still room for the regional segment.”
He is not very happy with its flagship channel ZEE TV’s performance lately. While Covid2019 has definitely bruised the business, he added that it had lost market share in the pre-pandemic period also. However, he emphasised that it is on its way to recovery and fairly optimistic about the next two quarters. Goenka is not only happy about its Hindi GEC channel but the recovery of the overall network in the same period, even for ZEE5’s advertising revenue.
“From my perspective, recovery in the advertising market has been reasonably good. I am pretty confident that from the next financial year, things will be back to normal and the country’s growth will fuel growth for advertising as well,” he stated. According to him, FMCG is at the forefront of advertising resurgence at this moment but going forward the advertising mix may change.
Rebuilding ZEEL:
Amid debt issues of the promoter Essel Group, the last 18 months have not been very smooth. But Goenka said the company really never underwent that current. It was largely related to promoters and the financial crisis faced by them due to several market dynamics.
But he acknowledged that this phase was quite turbulent for him personally. “Being a part of the family it was my duty to take some of that burden and to share that and make sure we come out keeping our head held high. Because in the end, the equity that we have built over being an entrepreneur for so many decades in the country can not be diluted by just one thing that happened. That took on me personally. But having come out of that last November, I have renewed the energy to come back to rebuild the glory that ZEE deserves,” he added.
In late July, he laid out the roadmap for its new journey while clarifying it he is here to stay and lead the transformation in a letter to shareholders. Governance, granularity, growth, goodwill, and gusto are the five pillars of ZEE 4.0, he stated.
The change and challenges in the ecosystem:
One of the major issues, not less powerful than economic turmoil, the players in the industry are facing is regulatory changes. While his peers in the industry like Disney’s Uday Shankar earlier expressed the discontent over frequent change, Goenka reflected the same tone.
“Unfortunately, I don’t have much to talk about the regulator. Because I have not heard anywhere in the world regulation changes this frequently. Of course, it is the right thing to do in their wisdom. I believe when NTO 2.0 will be implemented. , the impact will be felt more by consumers than by content providers like us,” he added.
“Its a function of fragmentation. At a time, we had only a national broadcaster that existed in this country and then came the time of private TV which was led by ZEE TV, and then a whole lot of people came into the market. Eventually, the market grows, and fragments. With the advent of new technologies, the market will further at best fragment and you will get smaller buckets of audiences. You are going to create content for a smaller bucket rather than creating for one size that fits all,” he commented on the overall ecosystem.
The new bet:
Well aware of the changes, ZEEL is trying to build a super app through ZEE5 to stay relevant. Where ZEE5 has already grown well in the domestic market on the back of local content, getting around 80 per cent revenue, from the country, it is now expecting to grow further in the west. ZEEL will soon shut the high-cost linear business in those markets and will deliver its content through ZEE5. The third or fourth generation diaspora audience who has lost connection to Indian content can come back to it through ZEE5. Taking ZEE5’s revenue up by four-five times in the next five years is his another major goal.
With the new independent board, changes in the margin and cash-flow target, ZEEL is on the right track. But challenges overmount as deep-pocket international players target the Indian the market for the next phase of growth. Even the HBO Max can enter India in the next two-three years. The upcoming merger of Sony and Viacom18 will throw a challenge in the traditional broadcasting business as well as OTT. Hence, time will say how ZEEL achieves the targets that Goenka has in the mind.
