 Hello and welcome to a very special episode of our series Beating All Orth. In this series we are profiling leaders who are standing tall and setting up examples for all of us on how to keep the business going in these mid-times of crisis. The leader I am talking to today has not just kept his routine work going but he has also recently closed a very big merger with an international player while sitting at home in this lockdown. So with me today is Mr. Pradeep Diwedi, CEO India, Iraq's international media. Welcome to the show sir. Thank you so much Naserji, it's a pleasure to have you and good to see you. I hope you are keeping well in these challenging lockdown times and thanks so much for having me on the discussion. Just one flag that while we have closed the deal sitting at home, there is actually a lot of work that has gone in the background including nearly a month that I spent in LA working with our merge partners now in stitching the deal together and ironing out all of the last minute challenges that typically such a merger entails. It's been an exciting journey and I'm glad to be back with you. I'm sure a lot of things must have started many months ago but we said it because for last four weeks now we are sitting at home, we are all in a lockdown and we got to know about it during the lockdown. So tell us more about the deal sir, let's start with this merger. Sure, so it's a very interesting partnership that we have built up now clearly when you look at Bollywood and the kind of businesses Bollywood has generated, we have largely been India focused and very South Asia focused in terms of the content and in terms of distribution. Even as a studio, if you look at EROS, we have been one of the pioneer studios that has taken Indian content worldwide by setting up offices in UAE, UK, US, Australia, etc. and making sure that Bollywood film entertainment is available all across the world. The next ambition for us really as a company was to build a global studio and digital media business which leverages not just our strength from an India perspective but adds the best of Hollywood into that as well. Really today if you look at the Indian businesses, there's no Indian studio that has really done any scale level partnership with the US studios and this is not just a partnership, it's a merger. We are actually going to become a single company called EROS STX Global Corporation as a result of this. As with any merger, there are a lot of things that typically goes into the rationale for why you are doing this merger. So we believe that there are 3-4 pegs on which the entire strategy is resting. At the most fundamental level is the culture because if there is no cultural fit, there's no chemistry. You can have the best of financial reason and the best of strategic and content reasons but if the culture is not fitting, the merger does not work well. In our case, the promoters are Chairman Mr. Kishore Dula and the Chairman of STX, Mr. Bob Simmons, have known each other for over a decade. They are really close friends and they have been on certain joint boards including UCLA, School of Films and Arts boards etc. So that friendship really culminated in an opportunity to create a global studio in our business. From a strategic rational standpoint, we really looked at the content story. Now we look at large India based movie content. They typically look at US Hollywood based films content that is there. The idea was to be able to amalgamate and take it to the world stage and create global film production which is leveraging the best of strength not just in acting talent but in terms of direction, photography, music, choreography, so on and so forth. So all of these skills that typically go in the movie production business, we wanted to take it to the global level. And then of course post that there is a technical advantage of getting the best of VFX etc. Also coming in and post production. This merger allows us to create a joint company that allows a huge market access in India and in US. And because we have built a large partnership in China as well because of our film distribution and we have done distribution of quite a few movies including Bajrangi Baijanga did extremely well, Andhaddon did extremely well etc. Andhaddon was a distribution in China and even movies that were distributed by others in China. Bundle for example did extremely well there. So there is a demand for Indian movies there, Duly Subtitle and Duly dubbed in Chinese as well. STX on the other hand has been looking at co-production in China for a while now. So the two companies put together will create a strategy where we will not only address India and the US, we will address the China market as well. That's one of the strategy crash now. The second really is the whole financial fit of the two companies. As part of the merger, so we have a particular size and we have grown to a particular level. STX had its own business that was growing well and putting out some good quality content with marquee stars such as Matthew McConaughey, Jennifer Lopez, Amy Schumer, Anne Halfway etc. And what we really want to now do is bring these talents together and create world class cinema in a financially sound model. As part of this merger we are also raising or we have raised 125 million US dollars from a bunch of investors including some that are existing investors in STX, the PPG capital is there and Honi capital is there, Liberty Global is there and we have also negotiated a line of credit of 350 million dollars from JP Morgan, a bank in the US for the combined entity. The result of all of that is that all of this cash lying with us plus the predictable revenue that we have over the next two years on the film slate that we have already produced gives us close to 600 million dollars in cash. Now translated at today's rate of about 75 rupees to a dollar, we are sitting on close to 4500 crores of cash that can be deployed effectively towards creating world class content. Now imagine a scenario where you have traditional Indian stories like for example if you look at the Indian mythology, at least on the Hindu mythology side, there is Ramayan and Mahabharat. Now Ramayan and Mahabharat tend to get seen in a very what I would call as a socio-cultural and religious context of India. Liberty has really looked at the universal appeal of those stories, however imagine these stories of ambition, aspiration, jealousy within a family, you know competition, fights and harmony all coming together but being presented in a global stage in a completely new surreal world with high degree of... These are just examples that you are sharing, sorry I am interrupting, just examples that you are sharing or you have already closed something on co-producing Ramayana and Mahabharata. So, we have actually on our slate looked at a lot of such content, so this is just one example I am giving of the kind of stories that we can do, we have not declared a stated intent of some of these, but these are some of the items, so there are Indian stories, there are American stories, there are Chinese stories and Chinese have a very similar ratio in ethos as Indians, right? So what we want to really do is make sure that we are taking that ethos and creating world cinema. A great example would be the movie Parasite which you know recently won the Korean movie that won the Oscar Best Film Award, right? It's a Korean movie, shot in Korean entirely with the Korean cultural context of a family that is economically challenged trying to make its way in the world and yet the humor and the aspect of that story and the dark humor of that story is such that it has universal appeal. We believe that we can create such winning content from India combined with the Hollywood studio for the world and that's one of the core strategies driving our business as well. So much of plan, I mean such interesting things you shared and all of this must have been in planning, I mean you just joined couple of months ago, so you know ever since you joined you must have been planning so much and in middle of all of this something like Coronavirus strikes and you are in a lockdown, how much has it slowed down your plans and processes? Actually not much, so if you look at the impact of Coronavirus it has been for the last four months so I will divide it into two parts, one is the specific reference to this transaction of this merger that we are doing and then the larger impact on the industry itself. So obviously the conversations have been going on for three or four months but a little longer than that but basically it has accelerated when you know I've also been brought on board and I've joined along with the management team to work on this deal very closely to make sure that our collective team is able to give the energies, give the right amount of focus in making this deal happen. Notwithstanding Corona, we would have gone ahead with this announcement any which ways, it is just a coincidental fact that we are announcing this in the middle of Corona, I mean if it had not been there it would have been even a bigger announcement. Now from an industry perspective the challenge has been that theatres have all got closed down right, they are all public venues and obviously all public venues are closed down. So what we believe is that at the worst case scenario it might, the theatrical impact might be there for a year, at a most conservative scenario or most aggressive scenario you may have theatres reopening in another six months or so. Now when you look at the film value chain clearly theatrical distribution is one of the larger sources of revenue which has now gone completely away. So we are looking at huge uptake in the OTT platform in terms of new subscribers and new content coming in to an extent the digital is actually replacing television as the second medium of choice for revenue monetization as well as audience attractiveness. In the earlier legacy scenario after theatrical distribution you used to have movie premieres and then it used to trickle down into digital and then you know there is a long value chain of let's say in-flight entertainment, CD, DVDs, local cable operators etc. But the whole revenue value chain of our business has completely transformed but digital is certainly coming to the forefront. Now our digital play which is Eros now is an extremely successful one in Indian film entertainment, we have over 188 million registered subscribers about 27 million paid subscribers which is literally growing by the month and what's interesting is that STX on their part do not have an OTT play right now. So all the content that they are producing we have the opportunity of bringing some of it to Eros now, some of it if we believe we can get better monetization by marketing it to let's say an Apple TV or a Netflix we are not shying away from marketing it there as well. So both the options remain available to us. You will be sharing your content with other OTT players as well. Oh yes for the right price we will definitely do that. We will ideally like to keep it at Eros now itself but ultimately the call is going to be based on whether we can see better revenue realization by way of new subscribers that we can add by placing that content on Eros now versus monetizing it well in advance by talking to some of the other OTT players. So we are a studio business which is its own profit center which we continue to make superior content whether it is filmed entertainment and movies or it is web originals etc. And while the production is currently halted because of covid if we believe that in the next couple of months as situation eases up and health services improve we will be able to get back to our production slate that we have already identified. We also have a very exciting range of movies that we had planned to come out this year including I will not name the titles but movies featuring Nawazuddin, movies featuring Tapsi Panu and Rana Dagobati and they are movies that are completed or nearing completion. So we believe that as and when this is lifted we will have some really exciting movies coming out in multiple genres which will appeal to the audience going forward. And with Hollywood partnership we believe that we can create a premium tier of OTT. So Eros now is our current OTT. By June we will also be launching something called as Eros Now Prime which will be targeted towards the upper demographic. Now there other than the STX content and the premium content that we have we have also signed up a partnership with Comcast NBC Universal and we will be taking their content. It will be very exciting. So again because we are doing this more in relevance to COVID-19 there is a clear increase in consumption patterns particularly for OTT or movie genre. I mean all those things that you deliver to us but there is nothing new on the platform because production has come to a halt. So how are you managing that situation? So see what has happened for us is that fortunately for us while we have had a series of movies that were already there on the platform we had content that was intended for theatrical distribution which is ready with us. We will soon be coming out and placing some of the content direct to OTT which basically means the movie is getting released but not in the theater but straight away on the OTT platform. You know that is the digital dream that we have. The second attempt that we are doing is we are refreshing our content with some of the international content. But yes, there is a challenge that beyond the point your own fresh content inventory which is work in progress will dry out and you may have to create new bank on older content. So two very interesting indications that are coming there. One is that we are seeing that audiences now going beyond the initial banner of movies or content that is placed on an OTT site to dive deeper into the site of layer 2, layer 3 and discover content of various types that they were typically not discovering earlier. Our engagement levels are up by about 95-100% on our Erosnow platform and we believe that those engagement levels and increase in subscription will actually continue to prevail even going forward. What is very interesting is that there is an attempt to engage the OTT audience even in an SVOD format that had not been done before. So if they look at attempts at gamification creating audience engagement by way of quizzes etc. So there are a lot of ideas around what we can do with the audience that is stuck at home and keep them entertained and keep them well. We are not in the news business but keep them informed of whatever is the latest entertainment content available. It's a challenging phase I agree and it's not the most convenient to do it because your technical teams are all spread out most of the stuff is happening remotely. But it's been exciting as well because in a situation which is of a very bad nature and obviously our heart goes out to everybody who has been impacted by COVID at a personal level whether in terms of lockdown or health issues that people have had it has also transformed the way people look at technology. It has also transformed the way we use some of the tools in our hand and also efficient use of our time. I mean look earlier the amount of time we spent just commuting from one part of Bombay to another we are saving 45 into 200 hours a day in just commuting and we are far more effective. You know you get, you freshen up you are in home safe and sound and you're able to connect with people. I know it's not the sustainable of the long term way forward but at least it's a change and you know you have to just sort of roll with the change. We've also become more self dependent with less help at home. Very good. But fortunately for me at least we've been brought up in a family where we have done everything as a child on our own as well whether it is badam, dharupocha you know washing your own clothes etc. There is no aspect of our homework that you know needs any additional training and we cannot claim to be one of those that find these interesting tasks to do and then photograph yourself with a broom and put it out there. This is stuff that you are expected to do. Of course you know at a certain stage of life you do get a custom to certain level of support being there but ultimately you know you have to follow the adage of apna haj jagannath. You know you have to make sure you are able to do all your homework and home stuff on your own whether it is cooking, cleaning, washing, managing. I think it has brought families together. More closer. There has been higher degree of bonding, better appreciation. I think there is also a sense that it has also put some of the families in a stress situation but the stresses are not a result of COVID itself. It is a result of stresses that may have existed in the past but because of close confines staying these you know fissures or these breakups or challenges are starting to come to the fore. You know that I work very closely with IAA as well right. I am on the managing committee of international advertising institutions India chapter. We have taken some of the social causes there and are promoting it aggressively whether it is around domestic violence, whether it is the need to connect to your seniors and elders who may be you know in lockdown in a remote part of the world and staying connected with them. So for example my mother who is almost 70 now is alone at Chandigarh with just my nephew. So I keep talking to her to make sure that she is engaged and she is not feeling the pressure of staying alone. You know my sister is a school principal in an uptown Himachal school. She is alone because you know as a government officer she is not allowed to go outside her school and she is missing her son who is in Chandigarh etc. But we are all coping with these situations right and there is always you know we have to find the silver lining in any cloud that is there and I guess you know that is the situation right now as well. How are you keeping the morale of your employees high at this time because everyone is affected by COVID. Absolutely and you know it is easy to do employee engagement activities quote unquote in an office environment because you have all the resources at hand and HR team can be you know put to the task of saying you do this everything from cakes to balloons to celebrations to rewards and recognition but it is not possible to do so in a situation where everybody is remotely placed right. So the fundamentals of working with teams does not change the fundamentals of reward recognition and employee motivation do not change. You have to make sure that employees are given as many tools as possible whether technically or financially or through medical support etc. if they need those. You have to make sure that there is constant communication and engagement with the employees and team members by way of talking to them to find out how. So there is some technical thing. Hello. Hello. And we have a lot of our employees logging in and doing yoga jointly with an instructor that allows them to you know this part of that you're all in the one room and we are doing it together so that builds a lot of good content. Okay so there seems to be some problem with the internet connection. Sir can you hear me? Yeah can you please go ahead. Sir before we close I want to understand from you how has this lockdown you know being at home for almost four weeks now has changed you as an individual or as a professional what kind of impact does that have on you? I would say the most fundamental change that I would have seen because of this period is that I have perhaps gained a deeper sense of respect of the value of time in terms of just taking a breath and you know internalizing some of the stresses and work issues that keep coming because you know in a routine day job between commuting and working in the offices we tend to get very reactive you know we respond to what is coming to us. Our ability to sit back think and plan typically takes a back seat and you know more often than not in a work environment where you are trying to create large scale transformations you get such time only on the weekend when you either read a book or watch something that you know gives you entertaining content or even think and you know do some personal research that you want to do to figure out the direction of your company your industry, your business or any other subject. I think this has allowed us a larger share of time to pursue some of those passions. I have you know been fortunate enough to catch up on a lot of movies that I wanted to see that I have not seen in the recent past so that's been a positive advantage. I've read a couple of books not too many but that is something that you know always has been a passion for me. I'm hoping that on the other side of this we will come back recharged, rearing to go and you know conquer the world as an industry, as a society, as a community much better and I hope and pray that we come out of this big challenge to the humanity soon enough. Mr. Devedi, thank you so much for speaking to us we wish you all the best you have we really sincerely from our heart wish that this merger gives you amazing results in future and we get entertained by all the productions that you put together with the STX Entertainment and right now we would request you to be at home stay safe and take care of your health. Thank you very much for speaking to STX for media. Thank you Nazadi, thank you so much for your wishes and inshallah we'll put out some really nice movies when the theaters open up once again you all stay safe as well. Thank you sir, thanks a lot.