How to create the biggest media game in town
How Reliance became the be-all and end-all of media in India?
In September 1959, India created its state-owned public television company called Doordarshan. It was a very humble beginning and few, if at all any, had television sets in their homes in those days. It did not even make daily transmissions until 1965.
In 1967, India’s longest-running program ‘Krishi Darshan’ debuted and was meant to impart knowledge to farmers on more efficient ways of farming.
In 1982, the first nationwide telecast was introduced and DD National was launched. Two years later another channel was added, DD Metro, which was to bring more modern programming to those in the Metro cities.
Beginnings
The content available at the time was limited. Raghav Bahl spotted an opportunity. Coming from a background in journalism he created the first video magazine called Newstack on DD in 1985 which was produced by the India Today Group. As time went on he diversified into other business news programs that were run on DD and it was at this time that the idea of creating a production house germinated. Network18 was born in the 1990s.
In the meantime, during the early 90s, India was opening up its airwaves for what was known as Cable TV. One of the major entrants in the Indian cable TV market was a joint venture company between Hong Kong billionaire Li Ka-Shing and Hutchinson Whampoa; they launched Star India. By licensing content from American broadcasters the company brought English content to Indian shores for the very first time.
The same joint venture would go on to launch one of India’s most well-recognised telecommunication brands, Hutch. In 1991, that business was still a few years away.
For a lot of Indians that period from 1991 was radically transformative. The Indian government opened up the economy. Cable TV brought exposure to life in the West right into our living rooms. Suddenly, the best thing you could watch on TV was not Chitrahaar and Ramayan. Not only that, thanks to the liberalisation, the brands that were ubiquitous in the shows also started finding their way into the lives of Indians.
By 1985, Rupert Murdoch who had started his media career as the owner of a newspaper in Australia had built a formidable broadcasting empire. In 1985, he acquired 50% stakes in TCF Holdings which provided him ownership of 20th Century Fox.
By 1992, seeing the exploding consumption of content he had licensed to Star India, he bought a controlling stake in Star India and acquired the entire company in 1993. In two short years, the Hong Kong-based company had created and flipped a broadcast company for close to a billion dollars.
Growth
In the meantime, through the 90s Network18 had been producing content not only for Doordarshan but also a show for Star India called the India Show and for BBC World called the India Business Report. They had competition though. Prannoy Roy had started a weekly program on Doordarshan called The World This Week which was immensely popular. His content was so popular he decided to start his own production company called New Delhi Television (NDTV).
Watching the ascent of NDTV, Raghav decided to partner with a Western major who could provide them with the know-how to deliver cutting-edge programming. CNBC-TV18 was born at the turn of the millennium. They decided to enter all realms of news and programming, leaving nothing to chance.
The first channels to come online were CNN-IBN, followed by CNBC, CNBC Awaaz and several others. At the same time, they spotted an opportunity to create online news assets and moneycontrol.com was born. TV18 started going after the Star stable with the introduction of Colours, their Hindi programming channel that took direct aim at Star Plus.
Leverage
Network18 was the original cash guzzler of the Indian ecosystem. Before Flipkart and Ola showed us how much more could be incinerated.
In 2008, Network18 was burning through 2 Crores every day. When the recession hit, all sources of funding dried up. The company was extremely leveraged. They needed a lifeline and they sought several suitors. No bank, no PE fund, or international network was willing to offer the Rs 1000 crore lifeline that was needed.
The only company willing to extend a lifeline was Reliance.
As part of the agreement to extend an equity of Rs. 1000 Crores, Reliance negotiated rights to purchase stock options. In 2014, as Network18 seemed to be digging itself out of a hole, Mukesh Ambani decided to exercise his rights and buy out the company. Raghav Bahl was sent packing from the company he had built over 2 decades.
Incidentally, a similar fate awaited his competitor Prannoy Roy who had also leveraged himself much in building out NDTV. He was shunted out by Adani more recently.
The New World
From 2000 to 2017, the global media landscape was changing. The old world of cable television was being disrupted and streaming was becoming mainstream. The choice was either to enter into that war or to lap up the pittance that Netflix would be willing to throw at you.
Disney was planning to embark on its streaming project and needed as much content as possible. They went after 20th-century Fox and all of the assets that came with it including Hotstar and the entire Star India portfolio.
In 2007, Reliance wanted to diversify beyond chemical and petroleum businesses and entered the world of telecom. Their initial foray was lacklustre partly because of their choice of technology - CDMA.
It was also a time when a lot of players were making their way into the Indian telecom market including Etisalat from UAE, Telenor from Norway, STel from Singapore, Docomo from Japan, and Sistema from Russia. India was seen as a large and lucrative market and the licenses were being given away at a flat rate!
Turned out that the licenses sold to these companies were underpriced and an episode called the ‘2G scam’ gripped the nation.
By 2010, the top brass at Reliance had seen the future. It was online!
They started making moves to build that ecosystem. They bought a company called IBSL which had acquired 4G rights from the government. In 2014, they also bought the leftovers of MTS the company launched by Sistema.
As many of the companies which had entered India during the 2G auctions of 2007 were bowing out, Reliance Communication was rebranded to Jio and rolled out its suite of telecom products starting in 2015. JioCinema, their streaming offering came to the market in 2016.
This was followed by a string of acquisitions of Indian startups, which were struggling to raise capital and could be bought for a song.
End Game
As the world was starting to realise the immensity of COVID-19 in 2020, Disney launched Disney+ in February 2020. It also rebranded Hotstar in India. At the same time, Reliance Jio was raising billions in capital from Google, Meta and Microsoft to build out the next generation of Data infrastructure in India.
Reliance raised as much capital during those months of lockdown as the entire startup ecosystem in India had managed to raise in the previous decade!
Seeing sports as an important lever, Reliance trained its eyes on the IPL right and acquired it in 2022.
With the launch of Disney+, Bob Iger completed his victory lap. His successful stint at Disney for 15 years was coming to an end. During this time he saw the entire Marvel Universe brought to life; enabled the acquisition of Pixar and the heights it reached; rejuvenated the LucasFilms portfolio; expanded the Disney Parks portfolio and finally pivoted to streaming.
Seen another way, he had sucked the juice out of every asset and departed. The Avengers series had ended and the franchise that was spinning billions in ticket sales and billions more in parks and merchandise sales was finished. Pixar had lost John Lasseter, one of the founders and perhaps the only reason to acquire the company. He was caught up in a sexual misconduct scandal and after a 6-month sabbatical departed.
By 2022, people stopped giving a shit about the pandemic. It never officially ended; it just faded away from our psyche. People started stepping out, theatres started seeing more people come in. Disney+ subscriptions started to plateau.
In India, there was renewed competition from Reliance.
Bob Iger was reinstated as CEO by the end of 2022 as Disney was struggling.
Inside Disney, a realisation began to set; running a successful streaming service was about pushing out a lot of mediocre content and relying on moviemakers to deliver some sparklers. Not to mention, catering to a global audience meant acquiring a lot of mediocre content in many languages. Disney was not built for this.
Rumours began to fly about Disney exploring a possible acquisition by Apple. At the time of Steve Jobs’s death, he was the largest single shareholder of Disney thanks to the sale of Pixar.
Seeking to reduce the number of fires to be put out, Disney entered into negotiations with Reliance to sell its India assets to Jio. An agreement was reached.
The combined entity will own over 120 channels and two of the largest streaming platforms in India. It will command 750 million viewers across India. They have formidable sports rights including all of the cricket played by the Indian cricket team, right to the entire football universe including EPL and UEFA, and right to all tennis grand slams.
Reliance which had zero exposure to the media industry in 2012 became the largest media company in a short decade.
That is the short story of how Reliance became the biggest game in town in the Indian media industry.