Q&A: Gunjan Bagla
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On Oct. 1, as China began a weeklong holiday, the largest group of entertainment industry labor unions in India -- that other giant market half a world away -- went on strike for the first time in 50 years of existence. The next day, Indian billionaire Anil Ambani, head of 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. 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 India, The Hollywood Reporter has turned to an India expert for a little perspective on the basics of the world's largest democracy.
Gunjan Bagla, a Los Angeles-based consultant who teaches executive business seminars at Caltech and wrote the book "Doing Business in 21st Century India," notes that India, with two dozen languages and a billion people, is no simple place. THR Asia editor Jonathan Landreth got a few pointers on what to expect when trying to bridge the divide between Hollywood and Bollywood.
The Hollywood Reporter: Is India the next China for Hollywood?
Gunjan Bagla: Don't think of India as China 2.0. Sure, both are large markets on the other side of the ocean, but the first thing I always tell people is that it's very easy to jump to the wrong conclusion about India. There's a classic tale in India about the blind men and the elephant: Six blind men approach an elephant. One grabs its tail and says, "This elephant is just like a rope." One grabs its tusk and says, "This elephant is like a spear." A third touches the elephant's back and says, "This elephant is like a wall." You get the picture. The point is, take India at face value but remember it is not one place. It's diverse.
THR: In the opening pages of your book, you draw the reader's attention to Ambani, the world's sixth richest man, according to Forbes. Tell us 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 -- Hollywood.
THR: What does the Ambani-Spielberg deal mean for Hollywood's relations 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. ... Today, Hollywood is looking to grow its revenues. Where are they going to turn? 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, big. 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's the greatest challenge to understanding the size and shape of the Indian entertainment market?
Bagla: For my consulting clients, I always do consumption-based data gathering, because in India people often understate incomes either as a part of some sort of Asian modesty about wealth or because of what they view as unfair taxes. But there's no shortage of money in that country today.
THR: What can you tell us about the recent film workers strike?
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: Who from Hollywood has a head-start in Bollywood?
Bagla: Disney is probably further ahead than most, with TV channels and the co-funding of films by Indian directors for Indian audiences. The great challenge in India is learning how to put (actor) Shahrukh Kahn in a movie that's culturally relevant to the co-producer outside India. With Disney's ability to make money from telling a story, its ability to polish up a story and deliver it up to the point where people will pay to see it twice, well, there's a chance that Hollywood could tap the vast reservoir of stories from India's lore.
THR: Sure, but "Mulan" flopped in China.
Bagla: For an Indian story like that of Akbar (the 16th century Mughal emperor) or his advisor Birbal, it will take collaboration with an Indian director or producer to get it right. Disney's been pretty good at this magic of collaboration, the way they are working with (Mumbai-based production company) Yash Raj Films.
THR: What's so different about India from China?
Bagla: It's OK to say India is a democracy, but it has its own baggage. For instance, until recently there was no kissing in the movies. Yet condom ads are everywhere in India. It's got its own special brand of conservatism.
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.
THR: When you send your executive students at Caltech out the door, tickets in-hand for their first trips to Mumbai, what is your parting word of advice?
Bagla: Don't be so intensely focused on work that you don't see the way that the average Indian lives. Sometimes your most important learning won't be in the conference room but out on the street talking to a taxi driver. The tendency is to hide in our hotel rooms and watch CNN. India assaults you, but you must engage. You need to understand why (veteran actor) Amitabh Bachchan speaks to people on the street.