zee entertainment: We’re pretty much done with cost optimisation: Zee CEO

Zee Entertainment has completed its cost optimisation phase and is now focused on growth, despite regulatory scrutiny, intensifying competition, and a challenging market, said Punit Goenka, chief executive officer of Zee Entertainment, in a conversation with The Economic Times. In a candid discussion with Javed Farooqui & Vinod Mahanta, Goenka addresses corporate governance concerns surrounding the company, the shifting dynamics of the media industry, and his strategy to compete with tech and media giants. Edited excerpts:

Shareholders had voted against your directorship, even as your reappointment as CEO remains valid for five years. How do you address concerns about leadership trust and alignment with shareholder expectations?

I believe I’ve already gone on record stating that I’m happy to step down from my directorship so I can fully focus on the company’s current agenda-driving growth, sharpening our strategic goals, and ultimately monetising those efforts. That’s where my focus lies.

And I know I sound like a broken record because I’ve said this so many times-but I did not run this company based on my shareholding, my directorship, or any other position. I led this business because of my passion for content. At the end of the day, this industry is all about content, and the only way to win is through great content.

The ongoing Securities and Exchange Board of India (Sebi) probe involving promoters remains a point of concern for stakeholders…But let me ask you this-what exactly is the sword of Sebi that’s still hanging? They said, leave the directorship-I left it. The shareholders asked me to step down-I did. What else is left? The Sebi is supposed to conclude their invest-igations, we are waiting for their find-ings. The Securities Appellate Tribunal (SAT) order was crystal clear on every allegation made. The Sebi, of course, has the right to investigate, and they should. I fully stand by the law of the land and will comply with whatever the regulator ultimately decides.

It’s been a year since the merger with Sony was called off, and Zee has been focused on cost optimisation. How much progress have you made in improving revenue and Ebitda?
As far as cost optimisation is concerned, we’re pretty much done with what we set out to achieve. We embarked on this journey once the mer-ger failed and by September or October, we had completed it. Now, the real story is about how growth returns to the industry. If this industry is to continue growing-and I believe it will, even at a nominal compound annual growth rate (CAGR) of 10%-that growth has to come from expansion.On the positive side, subscription revenue has remained steady, delivering healthy high single-digit growth. This comes from both linear and digital, though linear contributes more significantly due to its scale. Digital subscription has an impact, but given the smaller base, it doesn’t move the needle as much. Another factor I’m very optimistic about is television penetration in India. It’s still growing at a rate of 3-4% annually, driven by affordability and electrification.

We’ve seen headwinds in the rural sector, especially with this budget and other factors impacting consumption. However, some bounce-back should come from there. My bigger concern is on the urban side, where consumption hasn’t rebounded as strongly as expected. We saw some recovery in September and October, but then a sudden nosedive in November and December-even during the festive season.

How do you plan to rebuild investor confidence given that ZEEL’s stock has taken a beating following the merger termination and corporate governance concerns?
On the governance side, we’ve been working consistently since 2019. Five years in, not a single regulatory authority has raised a complaint against us. So, the perception that corporate governance is an issue at Zee will change over time as regulators and investors see the results and our efforts at raising the corporate governance bar. That said, I am confident that as long as we continue demonstrating that Zee is a board-run company, delivering strong results and financial discipline, perception change will follow. The fact is, we are a cash-rich, zero-debt organisation. I’ve gone on record stating that our policy will be to pay out 25% of our consolidated profit after tax (PAT) to shareholders-because at the end of the day, what does a shareholder want? A return. Even in a challenging year like the one we’re in, we still paid out a 100% dividend. While Zee typically distributes 150-200% dividends, even a 100% payout in this market is a solid number.

With the evolving media landscape and increasing competition, is Zee open to revisiting merger discussions with Sony or exploring other strategic partnerships?
My door is always open for every opportunity that will generate value for the company. If a proposition is brought to me, we will sit down, debate it, and carefully evaluate the key pros and cons-whether it’s an acquisition, a merger, or Zee acquiring someone else.

With cost-cutting in place and competition heating up from Jio-Star and global players, how do you ensure Zee stays competitive and ahead in a rapidly evolving, tech-driven market?

The market is what it is-I have to adapt to its realities. Technology is evolving rapidly, and if we don’t embrace it, we’ll be left behind. That’s why, even during cost optimisation, we never shut down our Bangalore center-we simply scaled it to align with current needs. We continue hiring engineers and coders to stay ahead.

As for competition, I’ve competed with them individually, and I’ll compete with them as a combined force. Throwing money at content doesn’t guarantee viewership-quality content drives distribution. Consumers now choose how and where to watch, making bundling obsolete. As long as we stay lean and create top-tier content, we can compete with anyone-just as we have against Disney and Viacom when they were separate entities.

What legal defence can Zee use to counter Jio-Star’s $940 million claim in LIAC arbitration?
It’s very difficult to plan for anything happening on the legal side. But my answer is simple-we believe our case is strong.

When do you expect Zee5 to achieve profitability?
This has become the billion-dollar question now, hasn’t it? I keep saying this, but if I look at the trends I’ve observed, we are still on track to break even. The market itself is shifting so fast. If we don’t adapt, that would be the real problem. The digital EBIDTA losses have reduced to ₹1.3 billion since Q4 FY24.