Q&A: Gunjan Bagla
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Gunjan Bagla, a Los Angeles-based consultant on the Indian economy, is the author of the new book "Doing Business in 21st Century India." An adviser to Disney and a professor at CalTech, Bagla cautions his executive students that India, with two dozen languages and a billion people, is no simple place. In early October, the largest group of entertainment industry labor unions in India went on strike for the first time in 50 years of existence. The next day, Indian billionaire Anil Ambani, head of the diversified Reliance ADA Group, was in Los Angeles reviewing the papers that would clinch a $550 million deal designed to help DreamWorks exit its relationship with Paramount. Then, the markets began to crash and there was the horror in Mumbai. Sure, Bollywood has long outdone its Western and Eastern cousins in the sheer number of movies made each year. But now that fickle, cash-hungry Hollywood appears to have shifted some of its interest from China to the Middle East and India, The Hollywood Reporter Asia editor Jonathan Landreth sought out a few pointers on how to bridge the divide between Hollywood and Bollywood.
The Hollywood Reporter: What can anybody say about the attack on the home of Bollywood?
Gunjan Bagla: (The U.S. and India) are the world's largest democracies and the world's largest entertainment industries. The horrible attacks in Mumbai underscore the fact that dastardly opponents of freedom, peace and multiculturalism hate both countries in the same manner.
THR: Your book quickly draws the reader to Ambani, the world's sixth-richest man. Why you were drawn to his story?
Bagla: In my book, I talk about how IBM went quietly into India but then, when it shifted gears, announced to the world overnight in 2006 that it had 43,000 employees in India. The Ambanis still don't register in the minds of most people outside India. (Anil's estranged elder -- and richer -- brother, Mukesh, runs another conglomerate, Reliance Industries.) But, like IBM in India, now you will see Anil moving very quickly into a realm well-watched all over the world and Hollywood.
THR: What does the Ambani-Spielberg deal mean for Hollywood's relationship with Bollywood and India?
Bagla: A lot of people in Hollywood remember Mastushita and Sony and may say, "Well, now it's the Indians' turn to lose their shirt in Hollywood." Sure, Anil is married to a former movie star, but this is a business deal. It's all about business. Reliance Big Entertainment possibly is going to have an IPO, and this is about building value that would attract shareholders. An IPO is not imminent and I would be surprised if it happened inside 18 months, but it makes perfect sense for it to happen.
THR: Today, Hollywood is looking to grow its revenue. Where are they going to turn?
Bagla: In China, Hollywood has questions about intellectual property protection and freedom of expression. This makes India more interesting. Then, considering technology, you have to understand that Reliance Communications (the giant telecom company and fiber optic network operator) put Ambani already where Hollywood wants to be in 10 years: owning everything from production to exhibition and digital distribution.
THR: If RBE were to seek capital in the markets, would Ambani bring the company to London, like Indian distributor Eros, or to New York, like Sony?
Bagla: Ambani knows India, and there's no shortage of money in that market now, so a listing on the Bombay Stock Exchange would be most likely. He has a long history of success at home and is very well known there. Tata Motors and (IT company) Infosys came to the U.S. markets in the mid-'90s. But now new Indian company listings overseas have fallen off. Since (U.S. investment law) Sarbanes Oxley, Western listings have become less attractive.
THR: Ambani's Reliance Energy had an IPO earlier this year. How did it do and might that have had an effect on the timing of Ambani's thinking about raising money for entertainment?
Bagla: It's no mistake that Reliance Big Entertainment uses "big" in its name. It matches their vision of themselves. Rather than wait for Hollywood, their view is to go to Hollywood.
THR: Where do the opportunities in India lie for entertainment investors?
Bagla: If I'm in Hollywood and want to make money in India, first, I make a private investment like Georg Soros, who owns 3% of Reliance Big Entertainment. Second, there may be Western companies that will make an investment vehicle that moves into India. One way to do this would be to build a DVD market slowly. The economics are such that the inconvenience of downloading soon will make a reasonably priced DVD an impulse buy for Indians 90-120 days after a movie's release. Another way is through PPV television.
THR: What can you tell us about the Indian film workers strike in October?
Bagla: In Hollywood, unions are typically organized by trade. In India, unions are organized by company and/or political party. As India heads into an election year, this strike was probably mostly about politics and parties jockeying for position. Indian workers generally are better off now than they were 10 years ago and the power of unions has declined. This has seen a bit of a reversal this year in other industries, particularly the automotive industry, for instance, but the very fact that last week's strike lasted only a matter of hours is telling. Indian strikes usually last days, weeks or months.
THR: Will we see more Indian influence in Hollywood soon?
Bagla: Indian directors and producers can tell stories to be sure. Indian stories are immensely popular in Russia, Africa and the Middle East. I once talked to Shekar Kapur (director of "Elizabeth") who told me, "The only way I know how to make this quintessentially English story as a movie is as a Bollywood movie." You look at the film's pageantry and it is a Bollywood film. Whether it's Disney telling the story of Ganesh (the elephant-headed Hindu lord of success) or Shekar Kapur or Yash Raj doing more Western stories, I can't say, but it definitely will happen in the next 10 years.