From A to Zee: Subhash Chandra’s spectacular rise and fall

• Chandra hit upon the idea to launch a TV channel after he saw big hotels showing CNN via satellite dishes during the Gulf War.
• Zee was India’s first private TV channel and had pioneered many superhit TV shows, reality shows and kickstarted the careers of many media barons.
• Chandra entered the infrastructure business and planned a hostile takeover of IVRCL which failed.
• By the mid-2010s, his new ventures had piled up a huge debt which pushed him to sell stake in crown jewel, Zee.

Remember Hum Paanch? Zee Antakshari? Phillips Top 10? These shows, now shared around social media by nostalgia lovers, were the first taste of Hindi TV programmes for many millennials. The generation saw the country move away from one or two channels with very limited entertainment programming; with the entry of private companies into satellite programming, forcing Indians to buy TVs that needed remotes.

The man who made this revolution possible was Subhash Chandra, a bright young man from Hisar. Born into an Agrawal Bania family, Chandra entered into business early in his life, and in the 70s before TV wasn’t around in India. After his family business fell into debt, he had to abruptly leave college, go back to Haryana and work on repaying debts. He started off running a pulse polishing mill with moderate success, but his fortunes improved as he supplied grains to Food Corporation of India (FCI).

By late 80s and early 90s, he was exporting rice and soybeans to Russia, and had also started a packaging company. It was all running smoothly, until one election season he saw that politicians were renting out vans with projectors and screens for their roadshows.

He later learnt that Five-Star Hotels owned satellite dishes and were telecasting CNN during the Gulf War. That’s when the idea of broadcasting content with ads in between came to him, he told Outlook Business in Secret Diary of Subhash Chandra.



The realm of reality TV

As he went about it, he was laughed off by DD executives, who coolly told him that they employ hundreds of people and equipment worth thousands of crores. He then intended to lease a transponder in Hong Kong and broadcast from there. STAR’s Li Ka-shing was not so receptive to the idea of broadcasting business in India. After many twists and turns, he rented a transponder; and India’s got its first Hindi channel in the Star bouquet in 1992.

Initially there was only three hours of programming, with reruns of old DD serials. But it soon branched out with chat shows like Chakravyuha. Many media barons like Ronnie Screwala who produced the chat show started their careers at Zee. Pritish Nandy also had a show on it called Fiscal Fitness.

The hugely popular Aap Ki Adalat, which now airs on India TV, also debuted on Zee. Rajat Sharma, its popular interviewer, also expanded the group’s political vista. The Union Minister Smriti Irani was briefly a stringer for Zee News which was launched later by the group. She, however, also became the star of Star Plus’ super hit TV show Kyunki Saas Bhi Kabhi Bahu Thi in early 2000s.

In addition to comedy shows, Zee diversified into drama shows like Neena Gupta starring Parampara in addition to Zee Horror Show. Its hugely popular Antakshari show was hosted by stars like Renuka Shahane, Pallavi Joshi and Annu Kapoor.



Bags of fan mail

In spite of growing success, Chandra had to convince advertisers to shift from print and outdoor ads to TV advertising. He did it by lugging along bags of fan mail sent by viewers of his shows. By the time other players saw how valuable reaching all over India with Hindi shows was, he was miles ahead.

He added more channels across movies, music in addition to news, across languages to his bouquet. By the time the world entered the new millennium, he had captured a large chunk of India’s eyeballs, not to mention hearts.

The deal with Richard Li, son of Li Ka-shing also included an option to buy 25% stake in the venture within a year. By the time he realised it was good business, the option had long expired. Chandra refused to sell him the stake, took his company public, and the issue was subscribed 60 times over. The goatee-sporting man had become one of India’s first media barons and a billionaire.

A failed hostile takeover

By 2004, his media conglomerate was running steady, but Chandra, true to himself, was already hunting for the next big bet. The sector he chose was infrastructure. Back then, India was building roads, adding power generation as well as distribution assets, and setting-up ports and airports with a renewed fervour.

Many small regional players like GMR and GVK became national companies after they won large-scale airport projects. It seemed like a good business. However, by the time Chandra entered it in 2008, the sector was showing signs of fatigue, due to credit crunch and more. Players were seeing the effects of adding heavy debt onto books.

One such company was Hyderabad-based IVRCL which had a good set of projects, sizeable orderbook but was crushing under debt, in 2012. It was borrowing money for working capital purposes, and projects were moving ahead slower. Chandra believed that a hostile takeover of the company would catalyse its infra business which was executing a few highway projects.

He went in and acquired a tad over 12% stake in the company when IVRCL too changed track. It stopped bidding for new projects, started monetising its projects and paring down its debt. Eventually Chandra had to sell off his stock at a loss.

Takeovers are a high stakes game. Though the financials were never disclosed, the assumption, based on the company’s market cap at that time, he might have spent ₹200 crore on it. On the other hand, its own infrastructure business never scaled up later on, and continued to report deep losses for the next few years. It was a strategy gone wrong, as he later admitted in his open letter.

Politics to pledging

In 2016, Chandra made his political debut to become a Rajya Sabha MP representing BJP in Haryana. The close contest between him and the Congress candidate R K Anand was also interesting in other ways too. Chandra was declared winner after 14 votes were made invalid as they used the wrong pens.

In 2022, Chandra changed his ‘native home town’ to Rajasthan and filed his nomination as an independent candidate backed by BJP. He however accepted defeat after he fell short of over 40 votes.

On the other end, his business was branching out into many businesses, with varying successes, soaking in capital. It entered financial services, acquired Peerless Mutual Fund, investment banking, private equity and much more. It went into education with a chain of K-12 schools, gold refineries in addition to related media businesses like Fun Cinemas and Dish TV. He also had plans for a wellness company.

These expansions came at a cost, and a huge debt. The group soon had 87 operating companies which had straddled debt to the tune of ₹17,000 crore, as per estimates.

How was so much money raised? The promoters had to pledge their shares in listed entities like Zee Entertainment, Dish TV, Zee Media Corporation, SITI Networks, Zee Learn and Shirpur Gold refinery. Reports suggest that anywhere between 60-90% of their shares in these companies were pledged with lenders in the mid-2010s.

The chickens however came to roost in 2018 when the NBFC IL&FS bankruptcy spooked the markets, making it tough for him to rollover debt.

The loss of crown jewel

Soon, the promoters were forced to sell the stake that they had pledged. Zee’s promoter shareholding fell from 42% to a dismal 4% in its crown jewel, Zee Entertainment. In the meanwhile, its flagship Zee’s earnings also started dwindling, worrying analysts and investors; that led the market regulator to look into it. Between 2021 and 2023, its profits slid by 48%.

In 2021, for the second time in two years, Chandra admitted to his mistakes that led to default. He announced that he had settled 91% of his debts with 43 lenders. “I have no regrets for parting with a substantial ownership in the business and specially in the jewels of the crown,” he said in an open letter.

Apart from the promoter crisis, the businesses were moving at a slow pace too. Satellite pay TV has become less attractive to viewers now used to streaming. Dish TV, owned by his brother, has been losing steam as well. Edtech is facing its own existential crisis.

His digital ventures of Zee5 progressed but at a slow rate due to heavy competition. There are no updates on his plans for its metaverse venture, oddly named Maayaverse. On top of it, Zee’s plans to merge with Sony fell through, after two years of negotiations.

Sony is also seeking a $90 million termination fee, which Zee intends to contest. That means more legal troubles, barely a year after it settled a dispute with J C Flowers, an asset reconstruction company.

Chandra and his son Puneet Goenka are now part of a probe by market regulator SEBI, to see if money was siphoned off from the listed entities. That would be a tough spot to any businessman, let alone one who is devoid of crown jewels and without a seat in the parliament.

SEE ALSO

Subrata Roy’s journey from Lucknow’s Sahara Shahar to London’s Grosvenor House to Tihar Jail