What the future holds for Zee after Subhash Chandra's exit

The sun never sets on Subhash Chandra’s entertainment empire, even if several misplaced bets by the group on infrastructure and energy led to a stake and ownership loss for the Chandra family.

Chandra, who founded one of the largest broadcasting networks in India, hung up his boots at Zee earlier this week after further selling a stake of 16.5%. Around the same time last year, the family held around 41% in Zee.

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The Chandra family is now left with 5% stake and Punit Goenka, Chandra’s son, as the MD and CEO of Zee Entertainment Enterprises. The company board, which majorly constitutes of financial investors, will appoint a new chairman in its next meeting.

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But despite the steep fall of Subhash Chandra, India’s original media entrepreneur, what he built still remains the most successful broadcasting network in the country.

Zee is still the envy of rival broadcasters as the network still enjoys 20% market share, programming content in 12 languages and over a billion viewers in more than 100 countries.

Subhash Chandra

According to experts, Chandra’s son Punit Goenka would still continue to call the shots at the network for a very long time and it doesn’t seem that the financial investors are likely to exit soon.

Currently, US-based Invesco Oppenheimer holds almost 19% in Zee, followed by the GIC of Singapore, which owns more than 8%.

“What one must realise is that Zee is India’s most profitable network. No financial investor would like to be disturbed. Also, a lot of major investors are close to the Chandra family and would be trusting the leadership of Goenka more,” said an industry veteran who has held a leadership position at a rival network.

In the last fiscal, Zee had a revenue nearing Rs 7,000 crore and a profit of Rs 1,655 crore. Whereas, players such as Star had a revenue of Rs 12,341 crore and a loss of over Rs 1,200 crore. Sony, which comes third in revenue terms, had a revenue of more than Rs 6,000 crore and a profit of Rs 346 crore. Viacom18 had a profit of Rs 81 crore over a revenue of Rs 3,665 crore.

“Sony is closer to Zee when it comes to overall revenue. But if you see the profit margins, Zee is almost five times bigger than Sony. Nobody has cracked the code of making the network profitable as the Chandra family,” said another industry veteran.

Puneet Goenka

Puneet Goenka keeping the flock together even in a tumultuous time

Talking about how Zee has gradually turned into a full-fledged corporate style of working, which is already ringing well with investors, a person close to the Chandra family said, “You may fault them for their lala style of working. But I think over the last 2-3 years even that has changed. While, of course, any proprietor-driven or any owner-driven company will have certain nuances but to a large extent bringing in Puneet Mishra there as the chief executive of domestic broadcast business has brought in a lot of systems and processes and I am told he has democratised the system. So people are happy.”

Despite facing a difficult time in the last few years, Goenka has managed to keep his team together and hasn’t lost any of his top lieutenants.

“The board would have wanted financial control and had their own person as their CFO. This thing has already been cleared as of now. Now if the management doesn’t try to make drastic changes with Puneet Mishra as the CEO and Puneet Goenka as MD, they have a very fine team across the spectrum,” said another industry leader.

Industry insiders say the mandate of Goenka for the time is going to keep the profitability and let the stock price come back to near-normal levels.

Network sale by financial investors is inevitable in the long run

According to experts, the financial investors may not touch Zee for a while now but once the price is correct, they would be offloading the stake, and most likely it would be a single entity.

“Subhashji has put out a statement that he will repay everyone’s loan. One is not running but they also want to make profits right. They will certainly not wait for a little money from the dividends. They will either sell their stake to another financial investor or they will sell it to a strategic investor. Or the financial investors will offload eventually when the price is right,” said another industry leader.

Experts also said that in the next few years, the market appetite may still be missing but once the economy gets back on track, both Subhash Chandra and Zee could spring in another surprise.

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