When there is no revenue, it’s better to cut your losses than to try and flog a dead horse (Zindagi). We realised that soon enough and we took those decisions.
Twenty-five years since launch, and Zee Entertainment Enterprises (ZEEL) has its eyes firmly set on reaching three billion viewers in the next six years from the current 1.3 billion viewers. To this end, it is expanding into new genres and international markets, increasing its presence in existing genres and launching its digital product, Z5. ZEEL’s Punit Goenka and Amit Goenka, over a conversation with BrandWagon’s Chandni Mathur, throw light on the company’s plans ahead. Edited excerpts:
The last few years have brought in a lot of flux in the broadcast industry — from BARC to digital to FTA and TRAI. How do you see the next few years shaping up for the broadcast industry and ZEEL in particular?
Punit: I think there will be even more disruption in the market. While FTA did emerge, if we look at some of the recent developments (like MIB’s decision of halting bids for Freedish slots), FTA may soon be dead because DD Freedish is not willing to renew those deals; that is a whole new dimension in itself. But overall, I believe the television business will continue to grow even for the next five years. New technologies, new platforms will emerge but at least in the foreseeable future, it will be largely incremental to television.
ZEEL has been in the news lately from hiving off Ten Sports to acquiring 9XM and RBNL’s radio and broadcast business. Are you eyeing more spaces in the near future?
Punit: There are still several spaces that need to be filled. Within the current portfolio, while we were pretty small in the music genre, the acquisition of 9X Media has strengthened our portfolio significantly at least in Hindi speaking markets. But more work needs to be done in the Southern markets where we don’t have a presence beyond GECs. In fact, in Kerala we don’t have a GEC. We want to look at Kerala in an aggressive manner next year. We are also eyeing Punjab in a big way.
But with the music genre being niche and under-indexed, what potential will 9XM give you when the network already has ETC and Zing?
Punit: We only have Hindi channels right now; what 9X does is that it gives us a strong Hindi channel along with strong Marathi, Punjabi, retro and English channels which we were lacking in our portfolio. It will boost our network.
You have four Hindi GECs now. How different will each one’s proposition be because Zindagi was very distinct yet it failed?
Punit: On Big Magic, the acquisition has just completed, so we are looking at what the positioning should be. Zindagi was a great success from a brand perspective. I think in urban markets, it was a raving success but obviously the ratings don’t come from our homes and when there is no revenue, it’s better to cut your losses than to try and flog a dead horse. We realised that soon enough and we took those decisions. With other propositions, the opportunity still exists for us to look at multiple genres in the Hindi GEC space itself and we are working towards it.
But &TV is also struggling; how are you dealing with it?
Punit: That’s true but as a brand proposition, it is giving us great impact in the market because of its differentiated content. Yes, the ratings may not be where a Zee TV rating is, but definitely, the brand perception of &TV is very positive and we are working hard to make sure that in the next few quarters itself, its ratings pick up.
Do you see a time in the near future where you might want to re-enter the sports business?
Punit: Legally, I am forbidden to look at the sports business till February, 2021.
You also shut down ZEEL’s kids channel ZeeQ. Will you re-enter the genre?
Punit: Just like youth, the kids’ genre also will be addressed by ZEE through the digital platform. I don’t think we want to get into the linear distribution of kids content; it’s far more lucrative to do it on the digital platform.
With TRAI’s tariff order, what impact will it have on your overall distribution revenues, especially on channels which don’t enjoy a pull? Will there be a need to switch off some channels?
Punit: I can’t comment on the short-term impact, but in the mid- to long-term, it will be positive because whatever leakages our system sees will further get plugged by this tariff order. If you look at niche channels, they are already largely free-to-air; so from that perspective it should not impact them that much.
What is the vision for the digital business with Z5?
Amit: It’s a matter of weeks and we want to keep some mystery around it. But with Z5, Ozee and Ditto will cease to exist. It will have the largest film library, content in 11 regional languages besides Hindi and TV content from our portfolio.
The past year has seen ZEEL expanding into various international territories. Which markets promise maximum growth?
Amit: I think the business overall has seen a little setback this year because of the Middle East which has not performed as well, owing to various economic reasons. But we are seeing good growth in markets like Africa and the US. Europe has been a bit of a challenge because of our new launch, since it’s an investment year. Last year, we did very well in Bangladesh, but this year we had a setback because of regulatory changes. We have had new launches in Thailand and Vietnam this year, and I am happy that the former has taken off and is doing well.
When do you see these markets stabilise and what are the plans ahead?
Amit: The European business should stabilise next year because of the new launch; we have seen good traction on our viewership. The German channel is ad supported with no subscription revenue; so now that we have good content traction, we will see more advertisers coming on board. We also will be launching in Poland this year but that will be a pay product, so we will be comfortable from day one.
I am unable to answer on the Arabic front as markets like Egypt are growing for us but Saudi and the other GCC countries are witnessing de-growth, and it all depends on how economic conditions change before we see an upturn there. The US is a very stable business and we are expecting more new launches in that part of the world next year. I also see APAC doing very well as new products mature. Africa is still growing for us and we expect the trend to continue.