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Political power is often seen as essential in

India to acquire business power. So,
businessmen use politics to expand their
empire. But rarely does one come across a
person with his DNA soaked in politics
become a billionaire through enterprise. Meet
@alanithi Maran , the founder of Sun TV
Network, a company which is worth Rs 20,000
crore today.

The company's name itself establishes its

political roots. It is derived from Tamil Nadu's
ruling Dravida Munnetra @azhagam party's
symbol, the rising Sun. It operated out of the
party's headquarters in Chennai for years. Party
members were shareholders, before they were
bought out ahead of going public.

This separation of the company's ownership

from the party showed Mr Maran's mettle. He
exploited the benefit of political connections,
but also realised the drawback of continued
explicit association. His family parted ways with
the party, only to return when the party
threatened to destroy his creation, with the
state getting into the same business.
No wonder that Mr Maran, the grand nephew of
Tamil Nadu chief minister M @arunanidhi, has
created the biggest listed media empire in the
nation.

Heat in the Sun

"What differentiates Mr Maran from his peers in

the media and entertainment space is his enormous
ability to manoeuvre and tackle things - this may be
political or financial or familial, without
compromising on what he had set out to do or
achieve," says an industry observer who preferred
anonymity.

Having born in a family of artistes, poets and

politicians, Mr Maran worked in the publishing
business, then dabbled for a while in the monthly
news video Poomalai. Sensing a bigger opportunity
when the economy opened up and viewers wanted
something more than the sedate Doordarshan, he
launched Sun TV, almost like a cable operator.
Nearly two decades later, he owns daily vernacular
newspapers, magazines, radio, direct-to-home
telecast services apart from the flagship regional
broadcasting network. Now, an aviation company
too. Thanks to its model of less capital intensive
business, it is, perhaps the only company in the
media and entertainment space with best working
capital management- a barometer of efficiency and
short-term financial health.

Take for instance, the last two fiscal years. In FY10,

the company's debtor days decreased to 70 days
from 82 days a year earlier. Its creditors days
improved to 83 days, from 78 days a year ago. In
the past four years, the company has consistently
delivered an operating profit margin of around 70%
on consolidated basis.

V




At a time, when media firms commissioned

programmes with outside companies on a mutually-
agreed fee that could be increased on the basis of
the success of the content, Mr Maran followed a
different model. He sold air-time to production
companies and charged a fee for it. This lowered his
costs.

Having built a media fort in the southern states with

Gemini TV in Telugu, Sun in Tamil, Udaya in
@annada and Surya in Malayalam, he tightened the
screws on producers. He got into exclusive pacts
with producers that ensured his affiliates did not do
business with any competitor.

This exclusive pact also had a clause that stated that

Sun Network had the discretion to drop these
content providers, if their programmes failed to
draw the viewers. This arrangement put pressure
on the content providers to raise the quality of their
programmes and ensured steady revenueflow.

"He has an amazing clarity of vision and foresee

things and trends. More importantly, he doesn't like
to keep decisions or proposals pending," says Ajay
Vidyasagar, chief operating officer. He says Sun TV
Network launched Sun 18, a joint venture with TV
18, to distribute channels through cable, direct-to-
home and various other means, in just four months
when it would have taken a year for other
companies.
This is the next big thing for Sun TV Network as it steps out of
its comfortable southern states to earn money from Northern
and Western regions where its political clout will not be all
powerful.

Besides this, to make its business model robust, it has a DTH

company, Sun DTH , and production company Sun Pictures , to
raise revenues. While the distribution tie-up with TV18 would
enhance its analogue subscription revenues, its DTH company
would continue to digitise to cater to analogue subscribers.

"The southern market covers 65% of total film market in India,"

says Mohan Lal, media analyst with Elara Capital. "More so, the
average penetration of cable in the South is around 50%, while
cable penetration in northern and western market is between
25-30%. This provides Sun TV Network an edge over its peers."

Apart from this, considering that the literacy rate is higher in

the South, people adopting DTH would also be higher than in
Northern and Western regions. These factors are helping Sun
TV Network in a big way. Take for instance, the subscription
revenues of the company. In FY07, it was Rs 167 crore and
these were purely cable revenues and as of FY10, it more than
doubled to Rs 340 crore, with Rs 180 crore from DTH
subscription. This shows the rapid increase in the DTH adoption
in the past two fiscal years.

v

 



Even though all businesses are growing for Sun TV Network, its
regional concentration may not have been a good idea, say
experts. It needs a wider market such as Hindi to grow
revenues. Though some reports suggest that the company may
foray into Hindi general entertainment space, it remains to be
seen when this will happen.

This is at a time when rival Zee Entertainment Enterprise is

facing the same dilemma of "from-here-where-to-go" after
dominating the Hindi space for years. Some consolation for the
two is their negligible debt.

Zee has a debt of Rs 88 crore and cash of Rs 880 crore while

Sun TV Network has zero debt and cash of Rs 648 crore. With
so much cash, even Sun TV Network wouldn't be satiated with
its Southern innings.