Punit Goenka has navigated a turbulent five years at the helm of Zee Entertainment. From offloading a significant stake to resolve promoter-level debt and clashing with major shareholder Invesco, to the collapse of the much-anticipated merger with Sony and facing regulatory scrutiny from SEBI, challenges have been relentless. Despite losing his board position, Goenka continues to push ahead with his plan to bring Zee back on track. businessline caught up with Goenka to discuss his strategy to revive the company that once ruled India’s media and entertainment landscape.
When you sold a significant part of your stake to Invesco, Zee Entertainment was valued at ₹40,000 crore. Today, that value has eroded to less than ₹10,000 crore. As a promoter, how do you reconcile yourself to this value destruction?
The fact of the matter is that what needed to be done at that point in time had to be done. Because, at the end of the day, as a promoter, I have to live to fight another day. So, losing my stake was something inevitable, that I had to do. Since 2008 (when Goenka took charge as CEO), I have always treated myself as a professional promoter. I never worked here because of my stake. With my stake, I could have just sat at home and enjoyed my dividends. I worked here because the passion for content that I discovered in myself became so intrinsic. So even today, when I have less than 4 per cent, I still come to work charged every day, because I enjoy the content. I want to rebuild value for the shareholders, and my belief is the only way to do that is consistent performance, and that’s what we’ve been focusing on the last 9-12 months, to deliver performance.
In 2019, when you needed funds to repay debt at the promoter group level, you chose to divest stake to a private equity player Invesco, instead of a strategic investor. Do you regret that decision and what lessons have you learnt from that deal?
The promoters then had a majority stake in ZEE, which was available for them to divest, and it was done. As far as the future is concerned, being an optimist, my door is always open for strategic and financial partners. But I’ll be more cautious when I’m evaluating the deal. It’ll no longer be just about the price. It’ll be about what value are you bringing to the table, rather than just cash.
But to get a deal now, you will have to wait for the SEBI matter to get resolved?
Whatever the law of the land is, I am willing to follow it, and that’s why I gave up my directorship also. And in fact, that has helped me in the last 9-10 months, where I’ve focused on the business, and I’ve been able to take profitability from 10 per cent last year to 16 per cent this year (EBITDA margin). 60 per cent growth in profitability is not a small task.
How confident are you that you will be able to bring Zee back on track?
The industry is bound to grow at 10 per cent CAGR. It may happen in six months or it may take a year or so more. But it is bound to happen. And this market is going to be television AND digital. It will not be an OR market. And that’s where we have to transform ourselves to say we are a content company. My aim is to bring ZEE back to its 20 per cent profit margin. Even today, at 16 per cent, I can confidently say that we are amongst the best in class on margins, compared to anyone else in the industry. FY25 was a year to get our cost optimization in place. Before that, we were scaling the company for a merger. In that situation, a lot of our costs got inflated. Plus, we had one-time costs of the merger itself. So in FY25, we spent the first 6-8 months trying to prune all the costs and bring it back to the original ZEE way of working, which we have successfully done, and now our focus is purely on growth. And growth is again driven by 2-3 factors. Advertising is one. But the two other things that are kicking in for us are subscriptions and our other revenue streams such as international film business or music business. Those are firing well for us.
But how will you compete with the likes of Netflix and Jio, which are investing big on content at a time when you are cutting costs?
We invest in an idea. We don’t bet on the idea based on the budgets that it comes with. For example, Gadar. Most people said you are making the film after 20 years, who will remember this? I said, I am betting on the story and the idea. One of the biggest things we decided was that every actor and person involved in Gadar 1, should be brought here. Global platforms will have very, very deep pockets. Fortunately for me, I don’t need deep pockets. Otherwise, I’ll also be spending money without caring about shareholder return, which I would never do. Our fiscal prudence of investment with return is what has kept us surviving for the last 30 years, and that is something I am not willing to let go.
Will your focus continue to be on linear TV or will you shift big time to digital?
My view is that the biggest shift we have done already in our business is that, we are a content and tech company. We create content and using technology, we deliver it to the consumer. That is available on linear, OTT, theatre etc. We will deliver it wherever the audience is. We need to capture the mindshare of the audience. That’s the competition. At the end of the day, you have only a few number of hours in a day where you can consume content. How much of that can I take away, is the game we are working on.
If you had to evaluate some of the decisions you took, would you have done things differently?
I would have probably invested in ZEE5 in a more staggered manner. In hindsight, I would have not over-invested so much in anticipation of a merger. The integration process may have taken longer if I had not pre-invested so much, but that could have been part of the business altogether. I think it is this entrepreneurial mindset that gets you to say, I need to get it done right now and sometimes you may falter in the process.
Published on February 25, 2025
