Indian media tycoon battles to hold on to his empire
Subhash Chandra, known for his distinctive black-and-silver hairstyle, risks losing control just as Zee’s prospects are looking up, with the advent of streaming.
His family’s stake in Zee Entertainment is down to less than 4 per cent after he pledged shares to pare debt owed by his wider conglomerate Essel Group.
While Chandra’s son is running Zee as Chief Executive Officer, the media mogul is looking for ways to raise his family’s shareholding.
Invesco, unhappy with the way Zee is run, wants to remove Chandra’s son Punit Goenka as its CEO, overhaul the board and get a new owner.
The 70-year-old tycoon, who is no stranger to corporate battles deftly fended off Rupert Murdoch, who attempted to buy out their thriving five-year-old Indian television venture, to wrest back control of what became Zee Entertainment Enterprises Limited.
More than two decades later, India’s largest publicly traded entertainment network is back at the center of a complicated boardroom feud: Chandra and his supporters versus Atlanta-based Invesco Developing Markets Fund, Zee’s biggest shareholder with an 18 per cent stake.
Zee’s shares have plunged 50 per cent from a 2018 record.
At stake is a company that commands 17 per cent of the Indian media and entertainment market, reaching more than 600 million people.
Zee also owns a vast library of local-language content that goes back to 1990s — an increasingly lucrative asset amid global streaming and cross-cultural hits like South Korea’s ‘Squid Game.’
Zee’s own streaming platform is a leader among local players with almost 73 million monthly active users.
Global giants such as Netflix Inc., Amazon.com Inc. and Disney are seeking a foothold in India, one of the world’s most promising pools of future viewers.
Zee is “a brilliant business starting point for any suitor in India or overseas,” said Paritosh Joshi who runs the media consultancy Provocateur Advisory in Mumbai.
“Rupert Murdoch saw value in Zee 30 years ago and made Subhash Chandra his business partner. And the business case remains as India has 200 million television homes currently compared to 5 million then.”
The bitter face off between Chandra and Invesco has involved a war of words, including allegations by the tycoon that the U.S. fund has a “certain larger design” to take over the empire he founded.
Invesco has stuck to its demand for a shareholder meeting to fire Chandra’s son from the board and as CEO, saying the company’s founders were enriching themselves at the expense of ordinary shareholders.
Zee has asked a court in Mumbai to block Invesco’s call for the shareholder meeting. A verdict is due Tuesday.
The spat is threatening to spark a takeover battle. After Invesco’s attempt to facilitate a buyout of Zee in March by Reliance Industries Ltd. — helmed by Asia’s richest man Mukesh Ambani — fell through, it sought the ouster of Goenka.
Chandra countered by announcing Sept. 22 that Zee has entered friendly merger talks with Sony Group Corp., which has been scouting for Indian assets for some time.
The terms of the non-binding Sony deal, with a 90-day exclusive period, allow Chandra’s family to raise its stake to 20 per cent — terms that run counter to Invesco’s objectives.
Zee has said a merger with Sony is the best deal on the table, but it is open to offers from other bidders.
Reliance confirmed discussions were held with Goenka in March over a “broad proposal” to merge their media operations.
The conglomerate said Oct. 13 that differences arose over the role of the founding family and ways in which it could increase its stake.
Reliance said it decided against proceeding further, adding “we have never resorted to any hostile transactions.”
Zee, Sony and Reliance declined to make any further comments.
Sources; Bloomberg
