N.Madhavan December 16, 2010Four out of five people in Tamil Nadu watch this group's TV channel. No TV channel, Indian or foreign, can reach any audience in the state without its sayso. It has just produced the costliest movie ever made in Asia and most of the successful movies made in the state this year came from its production houses. It recently acquired a national low-cost airline and is said to be eyeing a regional one. No, we are not talking of any big business group. This is about the first family of the Dravida Munnetra Kazhagam, better known as the DMK, the ruling party in Tamil Nadu, which grabbed eyeballs because of the alleged involvement of one of its ministers in the Union government in the 2G spectrum scam.
Muthuvel Karunanidhi, 86, the DMK patriarch and Tamil Nadu's Chief Minister, does not need to necessarily seek funding from big business: his family members are great at starting businesses and making them thrive. No other political family in India that dabbled in business has managed to grow so big and dominate the businesses they are in as the Karunanidhis.
Their businesses span TV and print media, FM radio, TV distribution, movie production and distribution, real estate and even airlines. The market capitalisation of its listed firms alone exceeds Rs 22,600 crore.
Sun TV Network, owned by Karunanidhi's grand-nephew Kalanithi Maran, the elder son of former Union minister Murasoli Maran, runs 20 TV channels in four south Indian languages. Sun TV Network reaches over 95 million households across India and is available in 27 countries. Sun TV has an enviable channel share of 69 per cent in Tamil Nadu, according to TAM Media Research. Vijay TV, a unit of Rupert Murdoch's STAR TV, has 7.6 per cent. Jaya TV of rival All India Anna DMK has even less: 4.1 per cent.
Elsewhere in the TV crazy south, Sun Network's Gemini TV controls 43.7 per cent of the Andhra Pradesh market, and Udaya TV has 39.5 per cent of the Karnataka market. The dominance shows in Sun TV Network's performance. In the quarter to September 30, 2010, Sun reported an operating margin of 80.41 per cent. Even national players do not compare: Zee Entertainment's operating margin for the same quarter was 48.38 per cent.
Kalanithi Maran holds a 77 per cent stake in Sun TV Network. Karunanidhi's wife Dayalu Ammal sold out her 5.75 per cent stake in October 2005 before the group made its maiden public offering of shares. However, the Karunanidhi family owns Kalaignar TV, which broadcasts four Tamil channels. The TV channel was floated during the brief feud between the Karunanidhis and the Marans in 2007. According to government records, Dayalu Ammal has a 60 per cent stake in Kalaignar TV, while Karunanidhi's nephew Amirtham Periyanayagam has 20 per cent. Combined, Kalaignar TV and Sun TV have 82 per cent of the Tamil TV market.
The family's dominance extends to TV distribution on the ground too. Sun's Sumangali Cable Vision, a multisystem operator or MSO, has 90 per cent of the market in Tamil Nadu. Rajan Raheja's Hathway Cable & Datacom, a national level MSO and once Sun's only rival in the state, checked out in 2009. Today, SCV, controlling almost all the ground in Tamil Nadu barring a few MSOs in remote parts, says it has monthly revenues of Rs 8.25 crore.
In direct-to-home or DTH TV, Sun DTH has built a subscriber base of 6.4 million since its launch in September 2007. Dishtv leads the market with nine million subscribers - but it had launched its service in 2003.
The family has a strong presence in FM radio. Sun TV Network runs 45 FM channels (Suryan FM and RED FM) across the country. Kalanithi Maran also wields significant clout in the vernacular print media. His two daily Tamil newspapers have a circulation of over 1.3 million copies.
The Tamil film industry - production and distribution- is controlled by the larger Karunanidhi family, and not just the Marans, through Red Giant Movies and Cloud Nine Movies. Red Giant is promoted by Udayanidhi Stalin, grandson of Karunanidhi and son of Deputy Chief Minister M.K. Stalin. Cloud Nine Movies is owned by Dayanidhi Azhagiri, Union minister M.K. Azhagiri's son.
Sun Pictures, a division of Sun TV Network, recently produced the blockbuster Rajinikanth-Aishwarya Rai starrer Enthiran (Robot) at a mammoth cost of Rs 160 crore. Kalanithi Maran has indicated that after Robot's success, he intends to produce Telugu, Hindi and international movies.
Few small producers can stand up against the combine's ability to pump in money, the marketing muscle that comes from owning TV and FM channels, and the power to attract the best and biggest talent.
Kalanithi Maran's acquisition of SpiceJet from US private equity investor Wilbur Ross and the Kansagra family earlier this year for over Rs 750 crore marked the family's entry into aviation. Maran has already indicated that he aims to increase the market share of SpiceJet, India's second-largest low-cost airline, by starting regional routes and buying aircraft. He has placed orders for 60 aircraft. The bill: $3.60 billion. Karunanidhi has been in politics for seven decades, but the family's tryst with business began two decades ago. In 1988-89, Kalanithi Maran launched a news feature 'Poomalai' distributed in video cassettes.
Piracy killed the project in a few years. When India opened up the satellite TV business, Sun TV was among the first to get a licence, and began operations in April 1993. Sun TV Network's rapid growth has attracted allegations of political influence - which it denies strenuously. "My political connections had no bearings on Sun's success and the early days were tough. No advertisers were willing to take the risk of giving us ads when we launched in April 1993,'' the media-shy Kalanithi Maran has said before.
Not many buy his view. "Without political influence, Sun TV would not have been where it is today,'' says Cho Ramaswamy, a strong critic of the DMK and editor of Thuglak, a Tamil satirical magazine.
K.P. Sunil, Vice President for news at Jaya TV, says: "We had applied for permission to uplink two more channels in 2004. No approval came from the telecom ministry for more than two years. We finally got the clearance after we went to the Madras High Court and got an order in our favour.'' He points out that it is no coincidence that Dayanidhi Maran, Kalanithi Maran's younger brother, was the Union telecom minister then.
Maran junior was also caught in another controversy, involving Tata Group Chairman Ratan Tata, in April 2006. According to media reports, the minister had demanded a 33 per cent share in the Tata-Star DTH venture for his brother Kalanithi.
Dayanidhi Maran denied the reports vehemently but the political storm raged for quite some time, with L.K. Advani, the then leader of the Opposition, urging Prime Minister Manmohan Singh to move Maran out of the telecom ministry. Tata never denied the news reports. Again, when SCV, the family MSO, began taking over independent players, there were reports of muscle power and political influence. "They just came and took over our operations,'' says a former independent MSO now with SCV. He requested anonymity.
Hathway Cable, a national level MSO, called it a day and left the state. More recently, the family's presence in the film industry has triggered strong reactions. "There is no future for small producers of Tamil films like us. Even if we manage to make a film, big players with strong political connections have booked all theatres. There are 300 Tamil films awaiting release,'' says veteran producer K. Raghunathan. In his 36-year career, he has produced 17 movies and has the credit of launching Kamal Hassan as a hero in 1975.
"They are able to subject theatre owners to their wishes. Others find it difficult to survive. No one can release a movie without the family's approval,'' says Ramaswamy.
Some producers are attempting, through the Tamil Film Producers Council, to put a cap on TV promotions to create a level playing field for all producers. But theatre owners and film distributors welcome the family's entry into the movie industry. "They invest a lot of money, pay actors and technicians well and market their films extensively through their television network. All these mean good films and good footfalls into the theatres.
Why should we not wait and screen their movies? We are businessmen, after all,'' says a leading distributor, who also sought anonymity. He is also a producer. But ask him if he would venture into production now, and he retorts: No.
There are also many, including critics of the family, who acknowledge the business acumen of the members - especially of Kalanithi Maran. "He may have gained initially from political influence but one must admit that he is a good businessman and that has helped,'' says Ramaswamy.
Research by: Corporate Professional, BT