The Balaji Soap: Chairman Jeetendra Kapoor with wife and Managing Director Shobha Kapoor (centre) and daughter and Creative Director Ekta Kapoor

On a hot summer afternoon deep inside suburban Mumbai, Jeetendra Kapoor (Jeetendra to most of us, Jeetuji to those who work with him) strides out of his Mercedes-Benz into Balaji House. As he steps into the building, he pays his due respects to the divine (an idol of the god Balaji greets you at the entrance), and proceeds to his second-floor office. An armed security guard escorts him up the flight of stairs. Others entering the building have to wait in the lobby till the star is safely ensconced in his corner room. Once back on the ground floor, the guard is at ease, incidentally waving hoi-polloi in.

In his office, hemmed in by photographs of his family-wife Shobha, daughter Ekta and son Tusshar-and a few more gods, yesterday's Jumping Jack isn't much different from the showman you've been used to seeing on the big screen in 270-odd films. The thick mane and a trim figure could easily delude you into believing he's still gyrating around trees with buxom heroines. But Jeetendra's obsession these days can be summed up in one word: Content.

The Chairman of Balaji Telefilms, wife Shobha, Managing Director, and daughter Ekta, Creative Director, have proved they know a thing or two about content. Although the former hero is the more recognisable face of the company, it's Shobha and Ekta who've spearheaded Balaji's heady growth over the past three years from the basement of their bungalow. "We're no more a star's wife and a star's daughter now," smiles Shobha, the Managing Director, who looks after the production part of the business. "When my wife and daughter began work they were firm about two things: One, we would not do mythologicals; and, two, there would be no star system. That's when I too was discarded," quips Jeetendra.

It's obviously helped. By pioneering the daily family soap genre, Balaji at last count was contributing an awesome 40 per cent to the aggregate ratings of the top 150 programmes.

The company's sales have grown almost four-fold and profits 14 times over the past three years. It rakes in an impressive average realisation of around Rs 7.5 lakh per half an hour. And for its best-selling Kyunki Saas Bhi Kabhi Bahu Thi on Star Plus, Balaji manages to take home Rs 13 lakh per episode-which would mean a handsome profit of Rs 8-9 lakh per half hour.

Jeetendra's Dream Beam

But you can't keep Jeetendra out of the picture. Not for too long. His dream is to make Balaji an integrated media conglomerate with a finger in various pies including, along with television software, multiplexes, music, films, both big and small-budget, event management, documentaries, even in-flight entertainment. And even as Shobha and Ekta ensure that the soap factory is working smoothly, and overtime, the professionals on board are giving the finishing touches to a game plan that will open up much-needed revenue streams.

If the Balaji top brass is pulling out all stops to crank up the growth machine, it isn't without reason. The question investors-foreign investors hold 18.5 per cent in the company-are wrestling with is: After registering a mind-boggling 275 per cent cumulative spurt in profits over the past three years, is that high-powered engine now showing signs of losing steam? That apprehension is reflected in the stock price, which has been beaten down from highs in the Rs 130 range to around half that at the time of writing. It's true that the entire media sector is at the receiving end of punters, but then surely a company with operating margins in the 50 per cent-plus range and net margins of 32 per cent deserves more than a price/earnings ratio of 5.5!

Over the past year, a number of Balaji's soaps have come off air from the main channels (Star Plus, Sony and Zee). Although some of these have been replaced with fresh programming, some like Kalash and Kabhi Souten Kabhi Saheli weren't in sync with the realisations the company is used to pulling in. Till not too long ago, Balaji had three programmes on Zee (Koshish Ek Asha, Koi Apna Sa and Kitne Kool Hai Hum); today it doesn't have a presence on Subhash Chandra's channel. That's contributed to the number of hours of Hindi programming coming down from peak levels of 36 hours to 32.5 hours per week. Also, Balaji's presence in the top 50 is coming down; at one time it had close to 40 programmes in the top 50. Today, it has 25.

Clearly, Balaji's dominance is being threatened by competitors that are beginning to perfect the family soap formula pioneered by Ekta. So you have production houses like UTV and bag Films with similar saas-bahu themes squeezing into the top 25. "The family soap genre can go on forever. But the worry is that there is wide-spread duplication of the formula, as a result of which there is a glut of such stuff on TV," points out Sameer Nair, COO, Star TV. For Ekta, the Creative Director, however, viewer fatigue isn't an issue since "our presentation, characterisation and situations are very different. We are 50 per cent aspirational, 50 per cent identifiable, which is unique to Balaji".

What's also spooking analysts is Balaji's near-total dependence on television programming for its revenues. As a competitor points out, Balaji has been unable to leverage the powerful brand it has created by extending it into other media avenues. If 95 per cent of the company's revenues are coming from television, it's Sony and Star that account for almost two-thirds of that, with Star itself contributing 45 per cent. Analysts point out that such high exposure to one channel can have its downside, given that once the conditional access system is flagged off, viewership trends could change drastically. As Star's Nair explains, once viewership is affected, channels will have to rejig their costs, which in turn would mean lower realisations for production houses.

Going For Growth

One of Balaji's problems is that it can squeeze in only a certain number of soaps on prime time (currently it garners close to 65 per cent of the ratings during prime time). So how then does it increase its programming hours? Simple, by expanding the prime band, which conventionally begins at 8 pm and ends by 11.30. The Balaji brass hopes to create three additional half-hour slots by extending prime time from 7 pm right up to midnight.

Getting on new channels is also part of the strategy to increase programming hours. Although Balaji today isn't on Zee for the time being, it's opened up a slot on Sahara, plans to get back on Doordarshan (the national channel as well as DD Kerala and Bangla), as well as on Sun TV, in the process increasing its regional presence. V. Devarajan, CFO, reveals that the plan is to make regional programming account for 20 per cent of revenues as against the 15 per cent contribution currently. Along with weekend programming slots, Balaji will be adding some seven hours of additional programming (including two hours of regional programming), thereby taking its total programming hours to close to 40 per week.

Yet, if Balaji has to maintain the furious pace it's set, the non-television-based plans will have to begin kicking in soon enough. Jeetendra talks about a Rs 3-crore film he's made with Sohail Khan as the hero, where he's already covered the cost by selling overseas rights for Rs 1.5 crore, satellite TV rights for a little over Rs 1 crore, and the music for Rs 80 lakh. "The business looks good," he beams.

What doesn't look as good for shareholders, though, is Jeetendra's penchant for making bigger-budget movies within Balaji Films. Nothing wrong with that-as long as the star doesn't dilute his stake in Balaji Tele to fund his big-screen ambitions. He's done it once, when he made a placement of 10.13 per cent with a foreign investor. "What's stopping him from doing it again when he needs more money to make another film," asks an equity analyst at broking firm. Ajay Patadia, President (Corporate Affairs), is quick to point out that making movies under the Balaji Films banner is infinitely wiser than exposing the television programming company to the vagaries of the higher-risk motion picture business.

Jeetendra, for his part, is at pains to explain that he'd never do anything to hurt shareholders in Balaji Telefilms. "I treat the company like God. Post-IPO, I live in the same bungalow, drive the same Mercedes, have the same office. I don't take any money home. We put everything into the company."

In an industry that's notorious for the lack of systems and lack of governance, Jeetendra and family are leaving no stone unturned to convince investors that they come first. The promoters' shadow looms large over the company but coo Rajesh Pavithran maintains that "the Kapoors give ample space, and respect professional advice." Example: The professionals' idea about test-marketing family-based shows in China (either dubbed or sub-titled), or alternatively providing them the scripts, has been approved. Clearly, Balaji needs many more such bouts of inspiration to ensure that the success saga goes on and on-just like the saas-bahu soaps.