We use cookies to make your experience better. To comply with the new e-Privacy directive, we need to ask for your consent to set the cookies. Learn more.
Entrepreneurship & Innovation
Zee Entertainment and Essel Group: A Quest for Legacy and Beyond (A)
Published:
Nov 30, 2020
The case traces the entrepreneurial journey of Indian media baron Subhash Chandra. It starts with his entry into a struggling family business in 1967 and observes his evolution from a young, aspiring entrepreneur to the chairman of Essel Group, one of India's largest business entities with interests in diversified sectors such as media, entertainment, education and infrastructure. Chandra entered his family's agricultural commodities business in 1967 when it was in dire straits. In the 1970s and 80s, he forayed into entirely new sectors such as packaging and amusement parks. In 1991, he set up Zee Telefilms (later Zee Entertainment) and launched Zee TV, India's first non-public service television channel. By creating and broadcasting content in local Indian languages, Zee reached a wide audience of viewers across the country. Due to a first-mover advantage, Zee instantly became a huge success. Over the next three decades, Chandra pursued new business opportunities in the media industry, with considerable success. In 2018, Zee was a thriving enterprise, with a global viewership of 1.3 billion and business segments spanning broadcasting, music, film production, and digital over-the-top (OTT) media. In 2007, to create a long-lasting legacy and diversify his personal wealth, Chandra entered the Indian infrastructure industry and bid for multiple projects in a short span of five years, winning several of them. However, unable to convert the infrastructure projects into profitable ventures due to unprofitable bids and execution mistakes, he started to accumulate significant debt. His personal financial situation deteriorated to such an extent that he resorted to offering the shares of the listed companies he owned (including Zee) as collateral to banks to take additional debt to save his infrastructure business. The case ends with Chandra, and indeed his whole business empire, in a precarious situation due to indebtedness and facing some tough decisions.
Learning Objective
The case outlines the journey of an eminent entrepreneur in a developing market context. By studying the case, students will learn that, in such markets, identifying new opportunities and swiftly going to market often gives entrepreneurs a significant opportunity to create value. The case also deals with challenges related to legacy building, succession planning, and business diversification that entrepreneurs and business families face when their existing business ventures start doing well.
Pub Date:
Nov 30, 2020
Discipline:
Business Ethics
Subjects:
Corporate governance, Entrepreneurial business strategy, Entrepreneurship, Family businesses, Strategic planning
Source:
Indian School of Business
Product #:
ISB237-PDF-ENG
Industry:
Media industry; Telecom
Geography:
India
Length:
16 Page(s)
₹399.00
Related Case Studies
-
Entrepreneurship & Innovation
Zee Entertainment and Essel Group: A Quest for Legacy and Beyond (B)Case B of the two-part series "Zee Entertainment and Essel Group: A Quest for Legacy and Beyond" describes the evolution and eventual resolution of the personal crisis that looms in front of Subhash Chandra, Chairman of Zee Entertainment Limited, in Case A. Chandra was very well-known in India as a successful entrepreneur who brought entertainment to the masses in the 1990s through his television channel Zee. Although Zee had performed very well over three decades, Chandra found himself under significant debt stress due to failures associated with his infrastructure business, which he had founded in 2007. By January 2019, Chandra had offered most of the shares of the listed firms he owned as collateral to banks to borrow additional debt to sustain his infrastructure business. Several developments had occurred by this time that deepened Chandra's predicament, including the tightening of credit by financial institutions, a statutory body investigation into a firm that he owned, and an investigative report outlining his personal indebtedness. These factors contributed to a dip in the stock price of many listed Essel Group companies, and banks threatened to sell the shares of companies of Chandra's thriving media business to recover the debt. Chandra had to sell assets of his infrastructure business and most of his stake in Zee to pay off his debt. Corporate governance lapses at Zee also emerged at the time of the stake sale by Chandra, particularly around related party transactions with other companies that he and his brothers owned. Although his son Punit Goenka continued as the CEO of Zee, Chandra had to resign his chairmanship of the company and was left with a measly 5% stake in Zee, with the dominant shareholders now being institutional investors.
Learning Objective
By offering a first-hand view of Chandra's decisions and challenges, the case shows how skilled entrepreneurs often end up destroying value and personal wealth in the hunt for legacy and wealth creation. The case also looks at the potential corporate governance challenges that may arise when a powerful figure is at the helm of the firm.
Published: Nov 30, 2020