B&E: Yours is one of the first listed film companies of India. How did that change UTV’s growth radar?
RS: More importantly, we were one of the first ones that attracted private equity in media in India. It was a given that if we brought the private equity at some stage, we would need to list the company. It was just a consequential event; it was not any turning point.
B&E: The conglomerate decided against distributing dividends in the last financial year. Why was that? What is the expectation this time around?
RS: I do not think that media companies have an ordained plan of distributing dividends and dividend is never a high priority. We are not a government company and we are not a company with 70 years in the business. We are a high growth media company that constantly reinvests it’s profitability in other high growth ventures. So our shareholder returns are based on share value and not dividend. Microsoft did not give any dividends for 23 years of its existence...I don’t think they have a bad track record because of that. You need to be in a really placid water or calm water to be a dividend paying company... LIC and GIC give dividends. Companies are not judged on dividends today. Pfizer and other pharma companies with $40 billion or $70 billion revenues, and a stable income with a 3% growth, need to feel that they have to pay dividends because they do not have shareholder growth in value which goes up by 20% or 30% each year. It goes up by 2 or 3%.
B&E: Where do you think your competitors have beaten you?
RS: I believe everyone must look at the Media and Entertainment business as anything but competitive. We really do not spend too much time on a competitive landscape; not because we do not believe that there are people doing different things, it is actually because we are busy analysing how we can grow in the market. Right now, a lot of people are doing a lot of different things, which is going to help the industry. So if there is a youth channel and there are three competitive youth channels, the youth genre has to go up; that is more important than figuring out who is comparing with whom. We are doing 12 movies out of 200 movies that are being made, I can’t go around making 200 movies anyway; somebody is going to make the rest of the movies. So that is not competition.
RS: More importantly, we were one of the first ones that attracted private equity in media in India. It was a given that if we brought the private equity at some stage, we would need to list the company. It was just a consequential event; it was not any turning point.
B&E: The conglomerate decided against distributing dividends in the last financial year. Why was that? What is the expectation this time around?
RS: I do not think that media companies have an ordained plan of distributing dividends and dividend is never a high priority. We are not a government company and we are not a company with 70 years in the business. We are a high growth media company that constantly reinvests it’s profitability in other high growth ventures. So our shareholder returns are based on share value and not dividend. Microsoft did not give any dividends for 23 years of its existence...I don’t think they have a bad track record because of that. You need to be in a really placid water or calm water to be a dividend paying company... LIC and GIC give dividends. Companies are not judged on dividends today. Pfizer and other pharma companies with $40 billion or $70 billion revenues, and a stable income with a 3% growth, need to feel that they have to pay dividends because they do not have shareholder growth in value which goes up by 20% or 30% each year. It goes up by 2 or 3%.
B&E: Where do you think your competitors have beaten you?
RS: I believe everyone must look at the Media and Entertainment business as anything but competitive. We really do not spend too much time on a competitive landscape; not because we do not believe that there are people doing different things, it is actually because we are busy analysing how we can grow in the market. Right now, a lot of people are doing a lot of different things, which is going to help the industry. So if there is a youth channel and there are three competitive youth channels, the youth genre has to go up; that is more important than figuring out who is comparing with whom. We are doing 12 movies out of 200 movies that are being made, I can’t go around making 200 movies anyway; somebody is going to make the rest of the movies. So that is not competition.
B&E: What are those strategic mistakes you’ve made in the past that were critical?
RS: Tonnes of them. On a learning curve basis, there would be three in a day. If there were less than that means we are not experimenting, we are not being aggressive...we are not pushing the envelope hard....we are not being adventurous. The pace at which you grow and your ability to take risks is measured by the number of mistakes you make.
B&E: There would be some that you would like to tell us...
RS: I think we missed the first cycle of broadcasting of 1992-95 because we were too busy with the content space. I think we got into the home shopping business way before its time. The infrastructure was very low, credit card penetration was slow and people were not in touch with the field products. The third is probably diversifying into South-east Asian markets in Singapore and Malaysia. The markets were so small and so insular that it was not worth our time and effort.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
