India is a growth story and media in India, too, is a growth story. Staring at the downturn in the West that was having a cascading effect across the world, it was important to keep in mind that it was likely to have a stronger effect on the Indian stock exchanges than on the Indian consumer.
So, my first learning was a realisation that we always plan carefully for opportunities in good times—but actually it's the downturn that many times offers some very interesting opportunities. Of course, it's not practical to strategise for a downturn—but in every industry or sector one encounters an up-and-down phase—it's a 3-4 year cycle and yet we never build that into our plan.
The question that cropped up in my mind was: why is that we never think through all the opportunities that come our way, be they in good times or in bad? When you are strategising over three years, then it is a given that during these years there will be an upside and a downside. But we always plan for the upside. Having said this, we should also look for the good opportunities on the downside. To me, these opportunities would be even better than those in the good times. Because you could be paying for those opportunities one-tenth of the price… you could be starting something new because nine out of ten have been driven out of that business. Or you could be scaling up a business in which you were looking for a competitive edge but that edge wasn't there because everybody was so bullish. In a downturn, if you have positioned yourself right from the start, then it could be a great time to scale or launch something.
Secondly, success, it is said, comes to one who is at the right place at the right time. But a true test for a CEO is to be at the right place even when there is a downturn. And for that you have to be nimble, be disruptive in thinking and be a great listener. It's difficult to pre-plan such moves and that's what makes it challenging. Nobody ever thinks about planning for the worst times.
Thirdly, it's critical to quickly assess the downturn. Remember, there are downturns, there are recessions and there are depressions. Actually, in a downturn, there could be sectors which become huge opportunities, and it's important to assess that. So within one month it was evident that this downturn was one of excesses and most of the excesses were in the Western world. The US likened it to the "Great Depression" but really, it's their great depression.
The consumer was not hit, except in the US. But when that corrects, it will be business as usual, at least in most parts of Asia. The media and entertainment in India had its fair share of excesses. Investment bankers were pushing money into content, into platforms, into start-ups as well as into infrastructure, projecting growth that was unrealistic. So there was a challenge—stay out and maybe get left out or keep up with the mayhem.
It's difficult at that time to take a call as you never know how long the madness would last— if it stays for 3-4 years, then you could have upstarts, would be grabbing market share at a huge cost and eroding capital, hoping that top line finally converts to bottom line… I think it was a challenge for our teams to stay on their own terms of business. My next learning, actually more an endorsement of the past learning, is that in a downturn it's always better to be a consolidated story.
Many demerged their businesses to raise money at multiple levels during the boom. In a downturn, they have been the worst hit. I have been a strong believer that the whole is bigger than the sum of parts; we've been questioned many times on where our focus lies, but I think we have prevailed. Next year, we complete 20 years at UTV. One should always evaluate oneself with the environment.
Evaluating yourself with the competition is one thing and with the environment is another. If you don't benchmark yourself with the right competition and with "all" competition then you are in trouble. Being able to make this differentiation is also a key learning. In good times, the number of competitors that come into play are so many that you cannot distinguish between your real competitor and your puffy competitor.
And you could be looking entirely at a different strategy. One should always benchmark oneself with long-term players and assess one's environment and its threats and opportunities. I am imbibing these lessons in our strategy now. While movies, and broadcasting, and new media are a domestic story for me and my colleagues at UTV, gaming is an international story. Today, everybody thinks the gaming industry is going through a tough time. But it is going through a tough time in the US because the spending there is low there—and only for now. For me, the gaming story has just started in India.
In gaming, my company stayed the course and I think we are the better for it. In movies, I cannot say we came out unscathed, but we stayed with our convictions and did not lose our leadership position; most importantly, we know our audience well, and they were not going anywhere. In fact, they were happy to consume entertainment in tough times. In broadcasting, we were the very first to do a one-time cost correction. We stayed out of the general entertainment space, as we were always clear there would be no clear winners for the next 4-5 years. Today, broadcasting per se is in the doghouse, and for all the wrong reasons.
It's mostly a lack of comprehension and a business view by many who go more by perception than by reality. The fact is that India is one of the, if not the, fastest growing broadcast markets in the world. Any global player looking for growth has to turn to India. Our direct-to-home subscriber base will be the biggest in the world in the next 18 months, when we cross 30 million homes; the downturn did not slow down this growth.
Yet, in a downturn, the naysayers come out to shout—the key learning here is to stay with your vision; the naysayers will be back in good times, asking for "growth stories". The reason you are seeing a recovery is because everyone stopped spending, stopped hiring, stopped carrying inventory, investors stopped putting money in anything—good, bad or ugly. According to me, this is a ridiculous knee-jerk reaction. Anything in extreme does not make sense.
I think in the media sector, the challenge is that you are in a long-term play. You are building an asset, intellectual property, a platform, it could be anything. At the stage of the downturn, it is absolutely crucial that you stay with your values and your long-term plan and not get totally sidetracked. If in a downturn you have reacted to your long-term play, it's the biggest mistake you could have made. We could have easily scaled down on the number of movies we were making but we did not.
We could have scaled down and shut one of the channels but we did not. We could have easily stopped creating the games for our gaming business but we did not. In fact, we launched our fifth vertical, new media, right during the downturn. Almost in all our aspects we stayed with our long-term goal and as per the plan.
Lastly, personally, I also feel that in normal circumstances, when the going is good we tend to not look at the details. The details form the foundation of any business. When you get to the fundamentals right in the good times they also stand you in strength in the bad times… The downturn for media and entertainment in India has been a Godsend, as in one fell swoop it has removed all the fluff, which otherwise would have taken a perfectly healthy high-growth sector into the path of excesses.
— Ronnie Screwvala, 53, Co-founder and CEO, UTV Software Communications
(As told to Anusha Subramanian)