The Newsreel

In conversation with Himanshu Mody

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Himanshu Mody
Head, Group Finance & Strategy


Zee has considerably increased its M&A activity in the M&E space. What are the reasons for this strategic shift? Is consolidation the only driving force?

Our M&A strategy is based on a fair mix of three ideas –evolve as an integrated media house, consolidate operations to emerge as a market leader and exit from non-core businesses. Eventually, all objectives will provide significant upside potential for both revenue and profitability. The main idea is to get into all possible entertainment avenues needed to consolidate our market share and emerge as a media power house that offers advertisers a full suite of marketing platforms across regions and genres. Accordingly, most of our recent transactions are in line with this overarching strategy.
For example, radio was a big gap for us. Now that there is a clarity on the licenses for the next 15 years, we felt it was the right time to enter this market. Then, with a view to further expand our international offerings, we also acquired the UAE’s oldest radio station Hum. Similarly, on the broadcasting front, we acquired Big Magic, which gives us access to the comedy genre, enhancing our customer offerings. The acquisition of BIG Ganga and Sarthak further expands our reach in regional markets.

Why is the M&E industry seeing such a high level of inorganic growth? How many major players will the India M&E space see over the next 5 years?

Unlike in most developed economies, the media industry in Indian is still highly fragmented. Due to the limited scale of operations, companies are unable to exploit their full potential and many of them are underperforming and under margin / growth pressure. On the other side, large media companies are looking to further consolidate their operations and plug in the gaps in their existing portfolio via strategic acquisitions. Gaps could be in terms of regions or genres or media platforms – such a consolidation also allows companies to provide advertisers with a full array of marketing platforms pan India.
Secondly, with digitization, there is greater transparency in the broadcasting and distribution industries. This has encouraged companies to rapidly scale operations and expand reach, and acquisitions ultimately provides an opportunity to do so in a short time span. The combining companies can capture a higher market share, capitalize on synergies and leverage each other’s network.

What are your views on consolidation in the digital media space?

The digital media industry in India is still evolving. All subsectors in the digital space are witnessing strong traction, be it content, platforms or technology. While there has been a flurry of investments in the space, there is not much clarity and it is still too early to identify an ideal sustainable and profitable business model. Though we are still trying to determine how the industry will evolve, we believe in the long-term prospects of digital and have been actively exploring opportunities in this space to augment our existing digital operations.