Murmurs about a corporate rejig within Zee Entertainment have grown stronger over the past few weeks. In conversation with Urvi Malvania , Punit Goenka , the company’s managing director and chief executive officer, sets the record straight on the new corporate structure and provides his take on next year’s IPL media rights bid. Edited excerpts:
What explains the spate of exits over the last four months at Zee Entertainment?
:'-We have had some exits among the functional heads. But that is part and parcel of the business. At times, there is a mismatch in working styles of the organisation and people. We are working with Ernst & Young on right-sizing the organisation, keeping in mind the teeth-to-tail ratio and its structure. You will hear about some more changes on this in the coming quarters. There will be corporate roles and vertical head roles and the overlaps need to be defined clearly. We already have a CEO for live events and a new CEO for broadcast will join on October 1.
What will the new corporate structure look like?
We have identified five verticals: broadcast, digital, films, live events and international business. While I continue to be the MD and CEO, there will be heads taking care of these five verticals. They will all report to me. We want to transform from just a broadcast company into an all-round media company. Broadcast is and will remain the biggest piece in the business.
There have been allegations that some of these exits were the result of bribery and misappropriation of funds. Is that the case?
:-There is no truth in the allegations of bribery and misappropriation of funds. In fact, we have had a case of hacking within our system. Official email ids are used by (the) hackers to send out stuff to us (at the company). Of course, we are fixing that, but there are some issues in our IT structure.
We have sourced the hacking to the US. We are receiving emails within the company, from executive IDs. We discovered the hacking when my ID sent out instructions for financial transactions.
There have been two or three such instances over the past couple of months. We are conducting an internal and external investigation into the matter. The transaction size (of the mail) generated from my email ID was sizeable and that is how we became aware of the hacking. We have filed a complaint in the US as well.
There have been reports of the sale of Ten Sports. Does this mean Zee will be exiting the sports business?
:-The reports are all speculation. There is nothing of that sort happening. We are still working on sports and if you see the June 2016 quarter results, we have made a profit in sports. So we are still focussing on turning that business around. Dialogue keeps happening, as we are always open to strategic investments. If somebody brings value to a business, why should we not be open to it? But there is nothing concrete to report.
Will Zee bid for the IPL next year?
:-We don’t know about the bidding process right now. The way things are looking, it seems to be structured like a mutually negotiated contract between Sony and BCCI, and I don’t know if it will go to the bidding stage. It’s too early to say anything. We’ll only know next year what is decided. But yes, if it comes up for bidding, we will participate as we have done with other sports properties.
The digital space has been seeing a lot of action. What are your plans to differentiate the offering from Zee?
:-We already have a pay and free strategy in place on the medium. Now, through the kids’ genre, we want to innovate in the digital space. We are in the process of shutting down Kids Q as a channel, but the content will go digital in a big way. We have a head for that business. So fresh production on digital will come in the kid’s space. The kids’ category ranges from 4 to 16-17 years, so it’s a wide range.
Does this mean more channels will shut down and go digital?
:-We keep evaluating which channels are working and which are not. While we may shut down some channels, we are launching many too. Zee Yuva, a Marathi youth channel, was launched on Monday and on September 4 we’ll be launching our Telugu movie channel Zee Cinema Telugu.
We are moving away from the South Asian markets. We just launched a Bollywood movie channel in Germany and it is tracking well. In the first month it has reached around 1 per cent market share. Over the next three months, we will be launching a Spanish channel in the US called Zee Mundo. After that, it will be about expanding more in Spanish.
In India, what will be the focus markets for new launches?
:-The launches will be regional. Our numbers show regional channels are driving growth. We are present in most regional markets, except Malayalam. We are going to start investing heavily in Tamil again. I am pretty confident next year will see a turnaround in Zee Tamil. After that we will start implementing the Malayalam strategy.
Essel is setting up a shared services company called Essel Business Excellence. How is this going to impact the Zee Entertainment work force?
:-Anything that is non-core to the business in terms of procurement and management will move to EBEX. So things like administration will be under EBEX, performance management also will be under EBEX, but HR will remain with the company. Human capital is core to my business and I cannot outsource it. Common procurement of IT and media can be outsourced. That is where you bring in the strength of the group to drive efficiencies.
There will be a common pool of 300-400 people that will come out of all the entities put together and we will retain the best. Obviously, there is no room to retain everyone. Exactly what kind of reduction in staff we are looking at, you will have to check with EBEX, I cannot comment on it.
What impact will this have on Zee Entertainment’s cost structure?
:-I am looking at efficiencies of around 20 per cent. What is costing me Rs 100 today should in a couple of years cost me Rs 80. It’s only the back-end. My cost will not reduce by 20 per cent. In fact, the overall impact to my cost structure will be in the single digits. It’s just a better way to do it. And the company (EBEX) will eventually offer its services to other companies outside the group.
We want to transform into an all-round media company: Punit Goenka | Business Standard
What explains the spate of exits over the last four months at Zee Entertainment?
:'-We have had some exits among the functional heads. But that is part and parcel of the business. At times, there is a mismatch in working styles of the organisation and people. We are working with Ernst & Young on right-sizing the organisation, keeping in mind the teeth-to-tail ratio and its structure. You will hear about some more changes on this in the coming quarters. There will be corporate roles and vertical head roles and the overlaps need to be defined clearly. We already have a CEO for live events and a new CEO for broadcast will join on October 1.
What will the new corporate structure look like?
We have identified five verticals: broadcast, digital, films, live events and international business. While I continue to be the MD and CEO, there will be heads taking care of these five verticals. They will all report to me. We want to transform from just a broadcast company into an all-round media company. Broadcast is and will remain the biggest piece in the business.
There have been allegations that some of these exits were the result of bribery and misappropriation of funds. Is that the case?
:-There is no truth in the allegations of bribery and misappropriation of funds. In fact, we have had a case of hacking within our system. Official email ids are used by (the) hackers to send out stuff to us (at the company). Of course, we are fixing that, but there are some issues in our IT structure.
We have sourced the hacking to the US. We are receiving emails within the company, from executive IDs. We discovered the hacking when my ID sent out instructions for financial transactions.
There have been two or three such instances over the past couple of months. We are conducting an internal and external investigation into the matter. The transaction size (of the mail) generated from my email ID was sizeable and that is how we became aware of the hacking. We have filed a complaint in the US as well.
There have been reports of the sale of Ten Sports. Does this mean Zee will be exiting the sports business?
:-The reports are all speculation. There is nothing of that sort happening. We are still working on sports and if you see the June 2016 quarter results, we have made a profit in sports. So we are still focussing on turning that business around. Dialogue keeps happening, as we are always open to strategic investments. If somebody brings value to a business, why should we not be open to it? But there is nothing concrete to report.
Will Zee bid for the IPL next year?
:-We don’t know about the bidding process right now. The way things are looking, it seems to be structured like a mutually negotiated contract between Sony and BCCI, and I don’t know if it will go to the bidding stage. It’s too early to say anything. We’ll only know next year what is decided. But yes, if it comes up for bidding, we will participate as we have done with other sports properties.
The digital space has been seeing a lot of action. What are your plans to differentiate the offering from Zee?
:-We already have a pay and free strategy in place on the medium. Now, through the kids’ genre, we want to innovate in the digital space. We are in the process of shutting down Kids Q as a channel, but the content will go digital in a big way. We have a head for that business. So fresh production on digital will come in the kid’s space. The kids’ category ranges from 4 to 16-17 years, so it’s a wide range.
Does this mean more channels will shut down and go digital?
:-We keep evaluating which channels are working and which are not. While we may shut down some channels, we are launching many too. Zee Yuva, a Marathi youth channel, was launched on Monday and on September 4 we’ll be launching our Telugu movie channel Zee Cinema Telugu.
We are moving away from the South Asian markets. We just launched a Bollywood movie channel in Germany and it is tracking well. In the first month it has reached around 1 per cent market share. Over the next three months, we will be launching a Spanish channel in the US called Zee Mundo. After that, it will be about expanding more in Spanish.
In India, what will be the focus markets for new launches?
:-The launches will be regional. Our numbers show regional channels are driving growth. We are present in most regional markets, except Malayalam. We are going to start investing heavily in Tamil again. I am pretty confident next year will see a turnaround in Zee Tamil. After that we will start implementing the Malayalam strategy.
Essel is setting up a shared services company called Essel Business Excellence. How is this going to impact the Zee Entertainment work force?
:-Anything that is non-core to the business in terms of procurement and management will move to EBEX. So things like administration will be under EBEX, performance management also will be under EBEX, but HR will remain with the company. Human capital is core to my business and I cannot outsource it. Common procurement of IT and media can be outsourced. That is where you bring in the strength of the group to drive efficiencies.
There will be a common pool of 300-400 people that will come out of all the entities put together and we will retain the best. Obviously, there is no room to retain everyone. Exactly what kind of reduction in staff we are looking at, you will have to check with EBEX, I cannot comment on it.
What impact will this have on Zee Entertainment’s cost structure?
:-I am looking at efficiencies of around 20 per cent. What is costing me Rs 100 today should in a couple of years cost me Rs 80. It’s only the back-end. My cost will not reduce by 20 per cent. In fact, the overall impact to my cost structure will be in the single digits. It’s just a better way to do it. And the company (EBEX) will eventually offer its services to other companies outside the group.
We want to transform into an all-round media company: Punit Goenka | Business Standard
