The gentleman moghul
The UTV Group CEO is bored for lack of challenge in the Indian media and entertainment industry, which, he says, is far from achieving the true scale
Ronnie Screwvala is an unconvincing media moghul. The founder and CEO of the Rs 664 crore UTV Group is erudite and completely nonchalant about discussing any issue whether it is regulation or media owners’ lack of vision. It is difficult to imagine 53-year old Screwvala muscling in on film distribution for Rang De Basanti or Jodha Akbar, or green lighting Emotional Atyachar. How, then, did he build UTV into arguably the largest content company in India, asks Vanita Kohli-Khandekar.
One part of the answer is that Screwvala is very familiar with the hurly-burly of the media and entertainment (M&E) industry. He started life as a cable operator in South Mumbai in the eighties, progressed to become a TV producer before taking UTV to its current form. It is the other part, the question of how to build scale in the content business, seemingly impossible in India, that fascinates me.
Screwvala’s office in Mumbai is a modest affair; it always has been. As we settle in, he offers me papaya, but I opt for black tea. We start talking shop almost immediately. Screwvala reckons that the lack of cross-media regulation is going to become a problem soon. You can already see it in the fact that broadcasters sit with three different agendas – as broadcasters, direct-to-home (DTH) operators and cable operators – in industry forums. So policy just doesn’t move, even as individual companies consolidate their share of voice. It might get difficult to untangle shareholdings after some time, he muses.
Isn’t that the story of the entire $17 billion Indian media and entertainment business – that it is nightmarishly factitious and fragmented, making everything from policy to scale difficult? There are thousands of one-man shows in film, TV, cable and broadcasting. There is only one billion dollar group (The Times). The largest cluster of companies falls in the Rs 5-100 crore topline bracket.
That is where UTV was stuck for several years till it decided six years ago that it had to become a large-scale, global, B2C content company. The result: UTV claims to own 14,000 to 17,000 hours of content intellectual property (IP) across games, internet, mobile, television, broadcasting and movies. Has it finally cracked the whole scale game in content? The last company to do that with any success was Balaji Telefilms. It hit over Rs 300 crore and over 1,800 hours of programming at its peak in 2006-07 (both down substantially now).
Screwvala’s response throws me off balance. “I am bored with this industry because I am not challenged. Where is the scale? Endemol (a Dutch firm that owns, among other formats, Big Brother) has seven IPs and they continue to earn from it. We haven’t even started defining what scale is,” he says.
My cup of tea is set aside as I listen. Balaji makes, largely, commissioned (non-IP) programming, so it cannot be used as a benchmark for scale. And nobody in India, not even UTV says Screwvala, is anywhere near true scale.
What stops him from gunning for it? “You need a persistent road map to reach Rs 5,000 crore, even that is less. Some of the newer technologies, especially the third (captive) screen, not the mobile, will help us reach it. Forget about TV, that is for grand moms,” he says.
Screwvala is now in his element. This is the stuff he enjoys – figuring out what could work, creating a business out of it and getting the right investors into it. When UTV made its first few forays into films in the late nineties, there were sneers all around. How could a supposed “studio” model work without a Yash Chopra or a Karan Johar at the helm?
Screwvala had no pedigree in the film business. Nevertheless UTV got into film production and then distribution because it wanted to capture the complete value of the films it was producing. UTV is currently the biggest film studio in the country and the business brings in half of its topline and profits. So I listen carefully when he talks about the content market of the future.
Screwvala is exceedingly bullish on what the mobile and other devices – say, an iPad – could mean for content businesses such as his. His point is that the consumer mindset, while using these devices, is a pay mindset. “You give him a BloombergUTV on cable, he may or may not pay Rs 5 a month for it; on a mobile phone, he could pay Rs 100 for it,” he says. When 3G and 4G take off, if even 60 million people or 10 per cent of India’s mobile population pay for video on the cellphone, it is a bigger market than television.
But isn’t getting a fair share from telecom companies a big issue? Screwvala snorts in contempt. He doesn’t think that a 70:30 or a 60:40 share in favour of telecom operators is unfair to content companies. “If I sell the BloombergUTV content on mobile, unlike cable I don’t have to pay carriage fee. There are no marketing costs, the operator does all the marketing. But he will do that only if I have compelling content,” he replies.
The “compelling” part is difficult. “There (on new devices) scale will come from different content, you can’t reformat the old TV and film content (what a lot of TV and film firms are banking on), the younger generation doesn’t care for it,” he says, spiking the last piece of papaya on his plate. He reckons that not more than 15 per cent of consumption will come from existing content.
These days a lot of his time goes in brainstorming with telecom companies and others on what this new content could be. He refuses to talk about what is being developed. “We will be ready when the telcos want to roll out,” is all he says.
Are the gaming bets linked to this one? UTV has already acquired three firms – IndiaGames, Ignition and True Games – all of which operate in different parts of the gaming market. “Globally gaming is the single largest segment in the M&E business and it is scalable, so we need to be there,” he says.
Since we are on the topic, why is it so difficult for most M&E companies to build scale in India? Is it ambition or capital that is missing? Screwvala reckons that it has to do with giving up control. To most media owners holding 51 per cent is terribly important, either as a private company or as a public one.
His moment of truth happened when Disney invested in UTV, with the option of upping it to a majority stake, which it did in 2008. He voted for scale and is happy.
It is the being listed part that bothers him. “Hand to my heart, in media going public is a pain, because nobody understands the business outside. So people pander to a small set of investors and analysts when they need to be taking a long term view – at least three or four years,” says Screwvala.
Here, finally, is an admission that many of his contemporaries have made. He is in some ways a regular media moghul.
As I wait for my guest, one of the most respected designers in Indian fashion, who is also 15 minutes late, I wonder if he’s chosen a suitable venue ...
Economic Survey rules out need for such reforms; analysts believe fiscal tightening, rural stress and political debacle might be restrictive
Shortlisting in a major defence order and opportunities in rail capex programme see the stock spurt 5% on Friday