Indian TV pioneer at the center of his own primetime drama

In the monopoly market for decades by a stagnant state broadcaster, Indian entrepreneur Subhash Chandra was the pioneer of contemporary television entertainment.

Launched in 1992 as India’s first private, domestically owned channel, its GTV viewers were offered theatrical shackle-breaking characters, lively quiz shows and talent contests in the drama series যা far from international state rent.

Today, the 70-year-old Chandra, in the upper house of Parliament, is at the center of his own drama, like the Indian adaptation of HBO’s legacy as he fought to keep his son Puneet Goenka at the helm of G – now India’s largest listed media company – in the face of shareholder revolt.

Dissatisfied with G’s declining share price in a bright Indian market, U.S. investment group Invesco, the company’s largest shareholder with an 18 percent stake, launched a board last month citing Goenka’s removal as CEO and concerns over corporate governance.

Chandra, whose family now owns only one per cent of Zir, dropped from 355 per cent in early 2019 to 2019, has challenged Invesco’s call for an extraordinary general meeting in court and raised nationalist sentiments against the US group.

The ability of influential Indian entrepreneurs to keep shareholders in their accounts is an important test when they fail to meet the expectations of investors.

The message is, if you are running a business with very small equity holdings, you will make sure it is a good business.

The results will also have a significant impact on India’s fast-growing but still fragmented entertainment market, where major international groups, including Disney and Sony, streaming services and local competitors are all vying for the position. Among the companies interested in a possible deal with G are Sony and Mukesh Ambani’s Reliance Industries.

One investor said the fight for control of G is going to be huge. It could change the way the entertainment industry works, ”he said.

G’s formula for making cheap and cheerful market entertainment is a cash cow and one of India’s most popular channels: it has 19 percent of the country’s TV viewers, second only to its long-time rival Star, which was bought by Disney in 2019.

“G is interesting to a lot of people,” Tendon said. “It is a good business that is generating cash and they have got a very strong hold in the Indian market.”

Paritosh Joshi, a former Star executive, said the fight to buy a media business in India was fought with “teeth and blood”.

Sliding share prices and relationships are bad

Chandra, who has close ties to the ruling Bharatiya Janata Party, ran into financial difficulties after diversifying its infrastructure and was forced to sell most of its G-holdings in 2019 to repay the bank.

Long-time shareholder Invesco has raised 11 per cent stake in G from Chandra, raising its stake to 18 per cent, and Chandra and Goenka remain as chair and chief executive, respectively.

India's online video market is growing rapidly

However, its relationship with the founding family has cooled over the past two years, as G’s share price has fallen and it has become concerned about how the business is being run.

Invesco came out publicly with its concerns on Sept. 11, with G claiming to call an EGM to vote shareholders on the removal of Goenka and a board overhaul.

The board rejected his call and, in a primetime appearance on G News, accused Chandra Invesco of acting “illegally and illegally” and claiming it was acting on behalf of another unnamed entity interested in taking over the business.

“There has to be someone behind it,” Chandra said. “This is a clear case of acquisition by a company in a confidential manner.”

In a subsequent letter to shareholders published this week, Invesco insisted that “operating an EGM is a shareholder’s right”. The letter further claims that the current board has “allowed G to be deeply involved with the financial crisis of its founding family”, which has destroyed the shareholder’s value.

Puneet Goenka, CEO of G.
Pune Goenka, GEO: Invesco calls for an EGM to vote to remove shareholders © Matthias Bulk / DPA / Alami

Invesco said it called on G’s management to remove the business from the “long shadow” of other interests in the organization’s family and spoke of the possibility of a strategic alliance.

But because nothing has changed, G is “suffering from extremely undervalued assets, selfishness and financial instability,” the shareholder’s letter said.

Sony’s a suit

Just 10 days after Invesco’s initial revolt, G unveiled plans for a 1.6 billion merger with Sony that would give the Japanese company 553 percent of the joint venture, leaving Goenka as CEO. As part of a “non-competitive” clause in the deal, Sony will give the family a further 2 percent stake.

Invesco sharply criticized the proposal, saying it was in favor of the founders at the expense of other shareholders, although it said a new board could consider a revised proposal from Sony or other potential strategic partners.

Invesco said on Wednesday that Goenka had discussed possible mergers with Reliance this year but that talks had not led to any agreement.

“Sony’s recent interest, as well as Reliance’s previous interest, should be a reminder to all G shareholders of all value shares held within this company, in contrast to its disappointing performance,” Invesco said.

Sony declined to comment on its proposed deal with GG but company insiders said that although the deal was complex and met with additional elements of drama, the group had completed other international media deals previously affected by unpredictable developments.

In a statement in late September, Sony said it had begun a 90-day due diligence process on the G. People familiar with the company’s negotiations say it is still working within that time frame, and will have a “viewer” of the situation with Invesco.

People close to Sony said it was working on the idea that when the deal was finally finalized, the Japanese company would work with the founding family. But they have also noticed that Sony has got experienced management in India, which will allow the deal to work without the involvement of the family.

Accepting G’s without the founders, these people said, was not the preferred option, but if there was no other option, a deal would still be attractive and worth doing.

Meanwhile, both Invesco and Chandra have been digging for a long battle.

“G is not a company – it’s an emotion,” Chandra told G viewers last week. “The audience owns. If they want to leave the company, I can do nothing. But I believe in them – and the government – that they will not let that happen.

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