GECs
The parallels between Rupert Murdoch and Essel group’s Subhash Chandra
Mumbai: Rupert Murdoch and Subhash Chandra. Two media barons, who are gutsy and un-put-downable. Each is a pioneer in his own way. Chandra for flagging off the Indian cable and satellite TV revolution in India with Zee TV, and later for drawing the path for many others who followed. Murdoch for building a global print media behemoth, fighting the newspaper unions in the UK, and winning, And then for setting up a television and movie empire which he finally hawked to Disney.
But both have another thing in common. Murdoch nearly lost control over News Corp in 1990 when his urge to splurge meant he over-leveraged his company and had to convince more than 146 bankers all over the world not to call in the loans and agree to his plan on restructuring the debt. Even then, a small outfit, the Pittsburgh National Bank, which had lent a $10 million loan to News Corp, held out and threatened to stymie the plan, which could have triggered the collapse of the whole plan. Murdoch and one of the main lenders Citibank’s Ann Lane flew down and managed to get the bank’s favour and Murdoch’s baby survived. And later of course it thrived, making good on all the debt.
Chandra shares quite a few parallels with Murdoch. He and his family have lost majority holding in Zee Entertainment Enterprises Ltd (Zeel) And his plan to save his empire by merging with Sony in India looks to be in trouble with the Securities Exchange Board of India (Sebi) ordering him and his son Punit Goenka to hold no executive positions in Zeel. The allegation is that he misappropriated funds to the tune of Rs 200 crore by taking a circuitous route through various companies to repay Yes Bank. Something unpardonable according to corporate governance norms. This could spell trouble for the Sony merger as conditions require Punit to be at the helm of the merged entity.
In Murdoch’s case, he had asked the lending consortium to include $800 million in loans in the debt restructuring package. That had been used for a private company, Queensland Press, controlled by him and his family. Some bankers were not in favour, but Murdoch finally prevailed.
Moving on to Zeel, observers are questioning if there are any machinations behind Sebi’s announcement regarding the divestiture of executive power from Chandra and Punit.
“Why was this announced just days before the NCLT hearing to finalise the merger,” asks an investment analyst. “Isn’t there something fishy? Obviously, bigger and stronger forces are at play here. The group seems to be under attack from vested interests.”
On his part, the goateed entrepreneur, says he has repaid more than Rs 40,000 crore in loans to various banks and institutions over the past three to four years.
Speaking to Zee Business recently, he said that he has sold the Essel group’s crown jewels to square off a large part of the borrowings. “I know I have to clear my debts and I have no problems selling assets to pay back. We expected to be in the clear by 31 March 2023, but the sale of some assets did not happen or it is in process. I will fold my hands and pay those three or four parties to whom we still owe money.”
According to Chandra, many other industrialists have huge loans and have at times found it a challenge to repay them but they don’t come into the limelight like his group has. “Everyone faces challenges. Some run away. Only the courageous stand up and fight them. I belong to the latter and I will overcome the situation.”
Chandra told the channel that he has given personal guarantees after January 2019 and he has gone so far as to even mortgage his own home to repay some of the debt.
“95 per cent of the lenders have supported us. It’s all about business. We have given them interest over the years, and they have gained quite a lot. Now, we have some losses. And most have stood by us. One or two lenders are insisting on us making good the losses. I am willing to do so up to a limit. But not all of it. When I have money in the future, I will even do that. I am a virtuous businessman and over the decades the Essel group has repaid debt amounting to Rs 50,000 crore, so why are we talking about smaller amounts?” he asked putting on a brave face.
He also said that he was no longer involved in the day-to-day running of Zeel and that both Amit and Punit were in charge there.” Hence, I cannot answer when the merger will happen or where it is at currently,” he said. “I know it’s been delayed and it should have happened sometime back.”
Will Chandra and his fighting spirit see the Essel group, Zeel, the merger with Sony and his sons Punit and Amit through? And will he be able to repeat what Murdoch managed in 1990 and beyond?
It will require more than a magician’s wand to do so, but going by his and his sons’ track record and the confidence that the Sony management has shown in the group, he well might. Watch this space.
GECs
Sebi sends show-cause notice to Zee over fund diversion, company responds
Regulator questions 2018 letter of comfort and governance lapses; company vows robust legal response
MUMBAI: India’s markets watchdog has reignited its long-running scrutiny of Zee Entertainment Enterprises, issuing a sweeping show-cause notice that drags the broadcaster and 84 others into a widening governance storm.
The notice, dated February 12, has been served by the Securities and Exchange Board of India to Zee, chairman emeritus Subhash Chandra and managing director and chief executive Punit Goenka, among others. At its heart: allegations that company funds were indirectly routed to settle liabilities of entities linked to the Essel Group.
The regulator’s probe traces its roots to November 2019, when two independent directors resigned from Zee’s board, flagging concerns over the alleged appropriation of fixed deposits by Yes Bank. The deposits were reportedly adjusted against loans extended to Essel Group entities, triggering questions about related-party dealings and board oversight.
A key flashpoint is a letter of comfort dated September 4, 2018, issued by Subhash Chandra in his dual capacity as chairman of Zee and the Essel Group. The document, linked to credit facilities availed by certain group companies from Yes Bank, was allegedly known only to select members of management and not disclosed to the full board—an omission SEBI believes raises red flags over transparency and governance controls.
Zee has pushed back hard. In a statement, the company said it “strongly refutes” the allegations against it and its board members and will file a detailed response. It expressed confidence that SEBI would conduct a fair review and signalled readiness to pursue all legal remedies to protect shareholder interests.
The notice marks the latest twist in a saga that has shadowed the broadcaster since 2019. What began as boardroom unease has morphed into a full-blown regulatory confrontation. The final reckoning now rests with SEBI—but the reputational stakes for Zee, and the message for India Inc on governance discipline, could scarcely be higher.
