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Zee Television: Can it comeback?

Jan 6, 2001

Murphy couldn’t have asked for a more high profile client than Zee. Everything that could go wrong with the company last year did go wrong. The company, which had one of the highest market capitalisations (Rs 672 billion; US$ 14.4 billion) in February 2000 ended the year with a market capitalisation which was nearly a sixth of that. But it did not start this way though.

Last year, the company integrated into broadcasting by buying out its erstwhile partner Star TV in its joint venture Asia Today Ltd. The company then announced an ambitious plan to upgrade its cable company Siticable’s network in 26 cities. What Zee had in mind was to control the last mile access in millions of homes via Siticable, provide them value added services such as Internet over cable and charge them a sum of nearly Rs 1,500 per home (US$ 32). It also set up a horizontal portal Zeenext.com.

It planned to ramp up its content and expand its network to 27 channels. Besides, the flagship channel would also become a pay channel by July 2001. From being a content provider to a broadcaster and then a cable company to being an Internet play, Zee had it all. There was nothing that it could do wrong.

And then came ‘Kaun Banega Crorepati’ – Star TV’s Indian version of ‘Who wants to be a Millionaire’. Not only did it bring introduce a new genre of programming in the country but it also went on occupy the top notch among the prime time programmes. Zee, which had seven of its programmes among the top ten programmes in the cable and satellite universe (till July 2000) was the hardest hit. Four of its programmes lost their coveted slots among the top programmes. Advertisers were willing to pay rates almost six times they were paying to Zee to get a slot on Star Plus’ game show.

Zee replied with a game show of its own. Billed as the biggest game show on earth with prize money potentially ten times bigger than Star’s game show went on air during Diwali. However, Zee shifted its most popular programmes to a later slot in order to take Star Plus head on. The verdict was unanimous: It was a flop show. One reason for this was that though the game show was far more sympathetic to the player, it was confusing for the viewer. Moreover, the sets looked far too similar to those of Star Plus’ game show. What was more critical was that Zee lost the prime time slot to its rivals as it had already shifted its popular programmes to a later slot to make way for the game show.

This was not the only unkind cut. Zee’s plans for its sports channel also went awry. This was after it lost the bid to bag the telecast rights of international cricket events for seven years to the WSG group. (Rupert Murdoch’s Star TV was part of this combine.) With sports in India being linked to cricket and the rights for cricket telecasts over the next five year’s already having been snapped up either by Doordarshan or the Star Sports–ESPN combine, the content for Zee’s sports channel would have been a problem.

By the end of the year, Zee announced a curtailment of investments in the broadband project, syndication of programmes for its flagship channel Zee TV and restricting its portal Zeenext.com to offering streaming video (the group had plans for a horizontal portal earlier). The group has whittled this capex plan to Rs 8 billion, with upgradation of the Hybrid Fibre Cable network restricted to 8 cities. (The management however will have to make a placement in Siticable to finance these moves.) It also announced the divestment of Buddha Telefilms Private Ltd. (BFPL) which owned the sports channel. The Zee group however, in a statement said “In the recent past, the mega appeal and power of cricket got sullied and soiled…BFPL will focus its strategy around soccer.”

The announcement of restricting Zee’s capex also puts a question mark on the group’s plan to make Zee TV, the flagship channel, into pay channel. The rationale for converting Zee into a pay channel was that the enhanced revenue streams that would accrue after Zee TV goes pay would help the company meet the increased programming costs. With Zee losing prime time slot to competition (read Star TV), it is quite possible that if Zee goes pay but its rivals Star TV and Sony continue to remain free–to–air, this move could mean a further loss of market share for Zee.

The company now seems to be taking steps in the right direction. It has yanked off its game show, brought back its successful prime time programmes on the same time slot that they occupied prior to its game show going on air. Whether these programmes are able to recreate the magic for Zee and get advertisers back remains to be seen.

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