NEW DELHI: Subhash Chandra, the grains-to-media tycoon and chairman of Essel Group, seems to be on the verge of taking yet another leap. Essel Group has decided to divest up to 50% of promoter holding in India’s leading entertainment company Zee Entertainment Enterprises Ltd. (ZEEL).
While Zee’s communication to the stock exchanges said it was seeking a “partner” for up to 50% of promoter holdings, investment bankers and media insiders believe it might be persuaded to sell its entire stake, according to a TOI report.
Chandra’s partial or full exit indicates he might have set his eye on bigger things. “There is informed recognition that the world is convergent today and the lines across media, telecom, manufacturing and technology are thinner than ever. The review showed that the family needs to accelerate efforts to stay ahead of fast-changing trends,” Zee said.
This is not the first time an inventive Chandra would be on the fork. Born in Hisar, Haryana, in a Marwari grain merchant family, a young Chandra had to drop out of school in early 70’s to make money and repay the family debt.
Chandra’s first big break was a deal with the Food Corporation of India to store grains in 1983. The grain used to be stored in godowns but Chandra floated the idea of keeping the grain in the open, covered by specially designed laminated plastic sheets. He convinced the FCI and bought the machines from Switzerland to manufacture the special sheets. Due to lack of trained engineers, the first production was 98 per cent scrap. Chandra then sent engineers to Switzerland to train them and eventually started successful manufacturing of sheets.
A few years later, Chandra got another inventive idea after his visit to Disneyland in the US. He bought hundreds of acres of land in north Mumbai and built Essel World, India’s first amusement park in 1989.
Though Essel World wasn’t exactly a big success, it peaked Chandra’s interest in the entertainment business which eventually led to creation of India’s first private TV channel, Zee TV. Chandra saw big future in the television sector which was hitherto dominated by the government’s Doordarshan.
After having failed to get a slot with Doordarshan and hire a transponder from it, Chandra approached AsiaSat in Hong Kong. His lack of suitable credentials did not impress AsiaSat. Chandra tackled the situation by offering five times more than the price. He reportedly paid $5 million for a transponder that was selling for $1 million. Splurging of such a large fortune on the transponder shocked his family and community. TV was an entirely new business in India at that time and one could not be sure of such a large investment. But Chandra made history by successfully setting up India’s first private TV channel which later grew phenomenally. The success of Zee TV proved his detractors wrong.
Now Chandra seems to be looking at yet another new direction. Zee said that “Subhash Chandra and family along with its advisors met in Mumbai over the Diwali weekend” and decided to offload up to half of its promoter holding of about 42% in flagship Zee Entertainment Enterprises Ltd, as part of a “strategic review of its businesses in the changing global media landscape”.
The entertainment sector is being revolutionised by convergence and over-the-top (OTT) services and this where Chandra might want to focus in future. In October, Zee Entertainment Enterprises Ltd. became the first Indian entertainment company to take its OTT video service, ZEE5, to over 190 countries. So far, only international players such as Netflix and Amazon Prime Video have a global presence of this scale. ZEEL’s managing director & CEO Punit Goenka said he expected Zee’s portfolio play to change dramatically in the next five years. Goenka said in an interview today the company was looking for global strategic partner to foray into virtual reality, augmented reality, Internet of Things and 3D printing to build a robust platform beyond traditional audio-visual content. He also said that they can let a strategic partner take majority control in case of a good deal.
All this would mean moving away from traditional broadcasting businesses to new-age trends. ZEEL stake sale could be Chandra’s opening move.