1. The Kkomeback of Balaji

The Kkomeback of Balaji

In its over two decade old journey, Balaji Telefilms has seen several ups and downs, posing a threat to its brand equity. But Ekta Kapoor’s resilience, coupled with an influx of professional management, is now steering the ship towards calmer seas. What makes the company still tick?

By: | Published: April 26, 2016 6:00 AM

Young Ekta Kapoor and her mother Shobha Kapoor entered the television content world when India was at the cusp of a satellite television revolution. They set up Balaji Telefilms in 1994, with an archetypal start-up story of a car garage doubling up as the production company’s office.

Aiming to gain a first mover advantage, the duo invested around `1.5 crore in creating four pilots for a channel, TV Asia. But soon enough, in 1995, they faced their first hurdle — Zee Entertainment acquired TV Asia. Ekta and Shobha were left in the lurch with their initial investment over. However, the mother-daughter duo worked through the problem and eventually put all four of its shows on air. These included Dhun Dhamaka and Captain House airing on DD, and Mano Ya Na Mano and Hum Paanch on Zee TV.

As Shobha Kapoor, MD, Balaji Telefilms, sees it, “What you are seeing now is very sophisticated; back then it was chaotic. But it was fun.”

It was the dynamic working equation between the two that made Balaji synonymous with the daily soap opera culture in the years that followed. However, it was also the same single-handed creative control of the business, that saw Balaji Telefilms go through tough times post 2008. How Ekta and Shobha brought in the business fundamentals to institutionalise Balaji and rework its various business verticals is what makes for Balaji 2.0.

As the group readies for its foray into the digital space with ALT Balaji, BrandWagon tracks the journey of Balaji Telefilms, profiling its growth trajectory and understanding what makes brand Balaji tick.

Kreative calling

Having worked in the garage for six years from 1994 to 2000, Balaji produced shows across genres. But only a few know that the daily soap opera business for the group started in South India with Sun TV.

It approached Sony Entertainment Television (SET) in 1999 with the proposal of producing a soap opera but couldn’t manage to attain a primetime slot. Sony’s then CEO Kunal Dasgupta gave them an afternoon slot where Balaji launched Ghar Ek Mandir. It was around the same time that Star India separated with Zee TV and was preparing for its grand entry in Hindi content spearheaded by Sameer Nair.

“Ekta had met me when I was at Star India to pitch a show, but the channel was half Hindi-half English so we couldn’t take it forward. I met her again in 2000 when I was in the midst of preparing for KBC (Kaun Banega Crorepati),” recalls Nair, now the group CEO of Balaji Telefilms.

Ekta’s brief narration of Kyunki Saas Bhi Kabhi Bahu Thi caught Nair’s attention and Balaji got its first primetime slot for a daily soap. It was a first of sorts for Hindi television as well, because in those days daily soaps were aired either in the afternoons or late nights. KBC and Kyunki…went on air on the same night — July 3, 2000.

Viewers got a taste of soap operas in a dramatic, intense form coupled with a glossy look due to the lavish sets and heavy make-up and costumes. In order to raise more funds, the group listed publicly on the Bombay Stock Exchange (BSE) in 2000.

The show being a success, also started Balaji’s ‘K’ fixation with Kahaani Ghar Ghar Kii, Kaahin Kissii Roz, Kahiin Toh Hoga, Kasautii Zindagii Kay and more. So quick was the climb up to success, that at one point of time, Balaji was selling the three Ks (Kyunki, Kahaani & Kasautii) to advertisers as a package at `20 lakh per 10 seconds. In about a year, Balaji was exclusively working for Star.

Around 2003-2004, Star India also invested and picked up a 26% stake in Balaji. The success of the K dramas with Star’s might ruled Indian television for eight years,

till 2008. Over time, the group soared to sky heights with its exclusive content deal with Star Plus and forayed into the motion picture business. But the stumbling blocks came soon and hard.

Katastrophe strikes

Times changed and the deal with Star Plus went kaput; Balaji suddenly found itself facing financial stress. The main problem, however, was internal. Balaji needed to move from being a family-run business to a professionally-run entity. Moreover, audiences too had had an overdose of the dramatic K sagas, which resulted in ratings dipping.

A media analyst, on the condition of anonymity, says that one of the commitments of the deal was that Star and Balaji were to launch a channel in partnership; but when the new team came in post Nair’s exit, this commitment was dishonoured. The financial hit was pretty bad because Balaji was getting a premium for each of its K shows on the channel. The pricing went down drastically, thus affecting margins as well. Balaji’s rule on TV ended in 2008 with the K shows going off air, and new, smaller production houses coming up with unique concepts catering to an evolving audience.

“Shows like Balika Vadhu came and we thought we should also do something rural and went into that space, but it didn’t really work out because that’s not what we are good at making,” says Tanusri Dasgupta, creative director at Balaji Telefilms.

Adding fuel to the fire was its mediocre result in the film business between 2005 and 2010. Slowly, things started to fall in place with a few movies like Love, Sex aur Dhokha, Shootout at Lokhandwala, Once Upon a Time in Mumbaai and Kyaa Kool Hai Hum performing decently at the box office.

But in 2012, as Balaji was gearing up for its star-studded premiere of Shootout at Wadala, the Income Tax Department raided its offices. While media reports suggest otherwise, Sanjay Dwivedi, CFO at Balaji Telefilms, says it was a minor setback as the officials couldn’t find any unaccounted cash and business went on as usual. However, brand Balaji suffered a further hit and this was a warning bell that the company needed to resurrect itself.

The Kkomeback

Brand Balaji suffered a big hit in its low phase, and many wrote it off as an amateur experiment by an actor’s daughter. In 2013, Ekta went to Harvard University for a three week long management programme and came back with new learning, which included institutionalising Balaji Telefilms, in order to recoup. It led to the setting up of an Advisory Board comprising Nair, Manish Chokhani, Dhruv Kaji and Akshay Chudasama. “My learnings from Havard have stood me in good stead,” says Ekta Kapoor, joint MD, Balaji Telefilms.

In the meantime, Balaji saw a few changes in management; it hired a CEO (Puneet Kinra) among others. One thing led to another and Nair joined as the new group CEO of Balaji in July 2014, post Kinra’s exit. A consulting agency Avalon Consulting helped Balaji arrive at the next phase of growth for the company. Its recommendations included an OTT, SVOD platform, creating original and premium content. The Advisory Board vetted the plan and work commenced on ALT Balaji from January 2015.

“The scalable part of our future is not movies, and TV has a limitation on how much it can grow,” says Nair.

However, Abneesh Roy, associate director, institutional equities — research, Edelweiss Securities, states that while Balaji is doing very well in terms of content, it could face a problem in scaling up the film and digital business. Reviewing its present strategy, Rohit Dokania, VP, research, IDFC Securities says, “ALT Balaji plans to go pay from day one and most Indians believe ‘free content’ is their birthright. Unless the content is groundbreaking and exclusive, no one might want to pay. ALT Balaji is its biggest bet yet, and if successful, it could create medium-term value for Balaji’s shareholders.”

In order to finance the expansion, the group raised funds to the tune of `150 crore from global investors, including Atyant Capital. Nair adds that ALT Balaji is looking to spend around `300 crore in three years. “We believe there is an audience that is under served by TV which comprises people who want individual viewing, most of it being male,” states Nachiket Pantvaidya, CEO, ALT Balaji.

Balaji believes FY17 is key, as it is a year full of movies alongside ALT Balaji’s launch in June-July. The movie lineup includes Great Grand Masti, Azhar, A Flying Jatt, Half Girlfriend, Udta Punjab and more. Balaji’s mediocre performance in the film business made the team sit up and take a small break to realign itself. “We had to revamp the slate and start again, so now we have a pipeline of six movies this year and six next year, all under control,” says Shobha Kapoor.

Being a risk-averse company, Balaji Motion Pictures will not be producing `100 crore movies and will focus on ones with a budget of `40-50 crore, says Aman Gill, CEO, Balaji Motion Pictures.

But for now, the biggest contributor to revenues is TV with 75-80% of the topline coming from this space. Balaji expects its revenues in FY17 to be 50:50 from television and motion pictures. In three years from now, TV, digital and motion pictures will be equally contributing to the topline, believes Dwivedi.

Even as TV is contributing a majority to the revenues, the fact remains that Balaji’s foray into the non-fiction space is very limited with Nach Baliye, Box Cricket League (BCL) and a few others to its name. Fiction is its mainstay and presently all of its shows are topping the charts like Naagin, Ye Hai Mohabbatein, Kumkum Bhagya etc.

Balaji Telefilms COO Ketan Gupta reveals that Balaji is also looking to do something in South India, but is trying to get the right construct. Meanwhile, it is producing a game show for YouTube with Marinating Films that will launch in June.

Furthermore, last year Balaji launched a fashion label, EK. The label was another brainwave from Ekta on how people would like to buy celebrity clothes at a reasonable price. Led by Devika Mehra, the label presently has exclusive deals with Best Deal TV and Snapdeal. At the moment, the label includes sarees and plans to expand into suits and kurtas as well. Mehra says, “Right now the prices range from`1,000-3,000. In the future, we do plan to go into the retail bit but we are still in the discussion stage at the moment.”

With all of its businesses well aligned and a professional atmosphere in place, all seems smooth now. But Shobha Kapoor is still not satisfied. “I want to be Yash Raj in movies, Balaji in TV and make ALT like Netflix in digital,” she concludes wishfully.

Behind the scenes

Working out of the one room garage in the early days, Balaji Telefilms saw editors, accountants and cameramen sit in the same place, with writers coming in and narrating scripts.

Shobha Kapoor’s cook would make food for everybody. At lunch time, everyone would be treated to home-cooked dal, rice and vegetables.

The first rush of any television show from Balaji’s stable has to be sent to Shobha Kapoor. And if something is not quite right, she tells the concerned department or Ekta. It’s her way of knowing how well each department is doing its job.

As a child, Ekta watched a lot of TV. Shobha would scold her all the time and let her watch only from Friday to Sunday.

Ekta loves to make horror shows. She always wanted a TV channel of her own and now, she will get it
on digital through ALT Balaji.

Ekta is totally in the thick of things when a TV show is launching. Every story, screenplay and script is approved by her when a show goes on air and the first 10 episodes are watched by her.

In 2008, Ekta had plans to launch her own TV channel, which fell through as the group was going through tough times. The discussion resurfaced in 2013, but the ship had sailed. Plans were put off permanently as the TV channel business was found to be too expensive.

The real drama

Gumrah: Four years ago, a young boy among Ekta’s trainees approached Shobha with a five minute pilot, asking for her support in making the show. When asked if he had a slot, he confidently told her that he will get one. Since she liked what he made, Shobha supported him. Armed with the pilot he went to channels and pitched it and got a slot on Channel V. The duo then made the show together. Today, the young boy has become &TV’s fiction head. His name – Vikas Gupta.

Itihaas: Balaji made Itihaas for DD in 1998, and even after three months, the show didn’t perform well. Balaji was getting only `4,000 for 10 seconds of advertising while competitors were getting `20,000 for 10 seconds. Unable to recover cost, Balaji was planning to sell the bulk of its 20,000 seconds to Adhikari Brothers for a lesser amount. But Ekta was not willing to sacrifice and in 15 days turned it around by taking a leap of 10-15 years in the storyline. Balaji ultimately sold the ad inventory for `25,000 for 10 seconds.

Once Upon A Time in Mumbaai: When Ekta saw the first rushes of the film, she felt the film was too dark and needed to get some gloss. She asked Shobha permission to reshoot for five days with
a budget of `2 crore. Shobha was a bit worried but Ekta promised to give so much footage that it would change the look of the film, and it did

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