He was always media savvy and had close Bollywood connections. Is Ambani Jr. dreaming of becoming a media tycoon now?
India’s
legendary businessman, Dhirubhai Ambani might have had some sleepless nights because of Ramnath Goenka’s crusade against him (remember Mithunda’s character in Mani Ratnam’s Guru – a film inspired by his life?), but Dhirubhai’s younger heir, Anil Ambani seems to be playing it safe. Slowly and steadily, this media savvy entrepreneur is cornering a larger share of the bourgeoning media and entertainment industry worth Rs.437 billion (FICCIPwC report).
It was in the year 2005 that Jr. Ambani gate-crashed into the media scene. Till 2005, Adlabs was a film and entertainment software company (with meagre presence in film production and multiplexes) when Ambani controlled Reliance Capital bought a 51% stake in it for Rs.350 crore. Today, Adlabs boasts of a diverse portfolio of film processing, distribution, production and exhibition and even has FM stations.
Moreover, Ambani’s recent deals in the channel space speak volumes about his growing interest in what is one pillar of media and is witnessing huge expansion at this point of time. Only recently, Ambani upped his stake in Aroon Purie’s TV Today (which has Aaj Tak, Headlines Today, among others under its umbrella) by 15% through Reliance Capital; along with floating an open offer to buy another 20%. Moreover, Reliance Capital also acquired 5% in Network 18 Fincap Ltd. which operates channels like CNBC TV18, CNN-IBN, et al (Ambani also has stake in NDTV, Zee Enterprises and UTV Software). Ambani’s presence may not be significant in the conventional media (read: TV & Print) but mention new media: you catch him right there.
ADAG’s IPTV and DTH (Reliance Bluemagic) – called the future of television viewing – are expected to be rolled out by the end of this year and in the DTH space, Ambani will take Zee (Dish TV), Star (Tata-Sky), Sun TV and Bharti head-on. Says, Timmy Khandari, Executive Director, PwC, “Anil Ambani’s stated intention is big in the convergence area. Reliance is the only player that has the technology behind it to sustain new technologies of distribution. In IPTV, it has both brandwidth and the last mile connectivity.”
Where
a strong presence on the world wide web is still a far fetched dream for many a established media players, Ambani’s ambitions have scaled that front too. What started with a single gaming portal on the Internet (Zapak.com) has not only expanded to an email portal (Zapakmail.com) but also to a community website (Bigadda.com a la Orkut), a movie download site for the NRIs (Bigflicks.com) and more are on their way. Grapevine has it that Zapak is already scouting for acquisitions abroad to fructify its investment of $100 million (over the next three years) which also includes setting up gaming cafes across the country with the first 8 unleashed as soon as within this month. Says Rohit, Sharma, COO, Zapak Entertainment, “Broadband is at the inflection point now with India’s 50% population comprising youth less than 25 years. Moreover, nobody has cracked the right property with tech strategy as Zapak.” Marketed aggressively, Zapak has made a niche for itself in only few months of its launch.
Ambani already has a major pie of Bollywood in his arsenal. Adlabs has a 70% share of the movie processing market; has ventured into distribution with hits like Krrish, Guru, Bheja Fry, Spider-man 3, et al, to its credit; it is also produced films like Gangaajal, Bluffmaster, Namastey London, Nishabd. Also, Ram Gopal Verma’s Sholay, Sarkar 2, Marigold are under production. Through a majority stake in Siddharth Basu’s Synergy Communications, Adlabs also has some popular television properties like KBC, Jhalak Dikhla Ja under its belt now.
As far as film exhibition is concerned, Ambani has big plans for this big growth area too and has outlined 315 screens in 130 locations across the country by 2009. Recently, Adlabs signed a deal with Rave Entertainment. The deal gives Adlabs control over 23 screens in North India. “Coupled with our own aggressive growth path, we are well on our way to becoming the market leader by July 2007. By end of March 2008, we will have a presence in 70 cities, spread over all significant film territories that contribute over 80% to the domestic boxoffice collections,” said Manmohan Shetty, CMD, Adlabs Films. PVR definitely has reason to worry. Moreover, Adlabs has also been approaching theatres to digitalise their screens. The new technology will use Reliance’s fibre optics (spread across the country) as the distribution tool, dramatically bringing down costs of multiple prints. Slightly off the league but not completely off it, Adlabs also ventured into the booming FM radio industry by acquiring 45 licences for its BIG FM, of which 18 have already been launched. Says an ecstatic Tarun Katial, CEO, Big FM, “After all the stations are rolled out, Big FM will touch every 5th Indian...”
With so much happening, it is not surprising that Adlabs has posted a growth of 174% in consolidated revenues at Rs.106 crore for the quarter ending March 31, 2007. It has also earmarked around $180 million to be invested over the next three years and the break up is 40% in film exhibition, 15% in processing and infrastructure creation for production services, 20% in content production and distribution. 25% has been kept aside for new initiatives.
While analysts may accuse him of focusing on too many areas and not having leadership in any, there is a smart strategy behind it all. Competition in the telecom sector has gone through the roof and will increase further with the entry of global giants. But, his position as one of the largest telecom players will go a long way in consolidating his position as a strong media player too, all thanks to technology. Right now, his every acquisition or venture in the media sector may not make big news but if everything works in the traditional scheme of things of Reliance (that is lot of buzz and dirt cheap prices), it would not be long when Ambani will claim the title of the next Media Czar!
Edit bureau: Surabhi Agarwal
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Source : IIPM Editorial, 2008
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