IIPM, GURGAON
While his energy plans may need a boost, Anil Ambani’s BIG plans in entertainment and media are going great guns at the moment. The year 2008 saw Reliance BIG Entertainment reach two significant milestones. The first was the dream like deal with US based DreamWorks SKG controlled by the legendary Hollywood film maker Steven Spielberg. The deal, worth $1.5 billion has both ADAG and DreamWorks equally sharing equity in a new vehicle based in Los Angeles that will deliver six movies every year. Considering that an average Hollywood movie costs at least $100 million to make, you are again reminded that Anil Ambani thinks BIG all the time! The deal with Spielberg was not the only connection to be established with Uncle Sam. BIG Entertainment also acquired more than 220 movie theatres across United States. And these are not the niche ones that show Bollywood movies to NRIs! Many in the industry think this move is a gamble that could prove costly in the long run. In fact, the original promoter of Adlabs (which Anil Ambani acquired and absorbed into his entertainment empire) publicly aired his unhappiness with these strategic moves and resigned from the board. Not that Anil Ambani was fazed!
The other milestone for BIG was the launch of Reliance BIG DTH services (through the RCOM platform) with a lot of hoopla. Apart from old players Dish and Tata Sky, Anil Ambani will battle it out here with familiar rival, Sunil Bharti Mittal. As per market reports, the venture has already captured 15% market share in just three months and crossed the magic figure of 1 million subscribers. Says Sanjay Behl, Group Head, Marketing & Branding, “Our features are designed for easy manoeuvrability in the most user friendly manner. Such user friendly initiatives will help us maintain our leadership position in the evolving Indian DTH market.”
That’s good news no doubt. But Anil Ambani will not really find much time to celebrate such “small” victories this year because really BIG challenges and hurdles lie in 2009 and beyond. His ambitious forays into energy, infrastructure, power and telecom will require huge investments, both in terms of equity and debt. Take the power sector for example. Just 1 MW of capacity needs a capital investment of Rs.5 crore or so and we are talking of more than 50,000 MW! By any yardstick, the younger one in India’s most famous sibling rivalry will not find it easy to raise the money, especially with liquidity troubles plaguing all and sundry. His backers can only hope that he draws inspiration from his father and pulls up many rabbits from his hat. He has a huge incentive: after all, if he fails, it is Mukesh who will well and truly inherit the Ambani legacy!
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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