Adani Stake Buy of NDTV: Brand ownership woes!

29 Aug,2022

 

 

 

By Avik Chattopadhyay

 

Avik ChattopadhyaySo there has been a lot of buzz around Adani ‘taking over’ NDTV. While claims and counterclaims are being made, I wish to divert your attention to spend the next few minutes on discussing the typical issues that rise when brands undergo a change in ownership.

 

In my professional life, I have undergone three such instances, when Exxon acquired Mobil, when Suzuki became the majority shareholder of Maruti and, when Apollo Tyres acquired Dunlop [in Africa]. In the first two cases, I was a member of the acquired brand while in the last, I was part of the acquiring brand. In all three instances, the crucial issues were always three – identity, independence, and integration. Guess the same applies to every case across industries the world over.

 

Identity

The acquired brand fears a loss of identity… specifically that it will be subsumed into the acquiring brand. this loss is not just of the name but also the brand purpose, values, and culture. While the fears are justified, in many cases, the new owner actually acquires the brand for improving its own stature, credibility, capability, segmentation or market presence.

 

An example is the Chinese automaker Geely acquiring brands like Volvo [cars], Lotus, Benelli and Polestar. It has done to gain recognition as a global corporation while also enhancing the group’s capabilities in aspects of research and engineering. Here, the owner will ensure the acquired brands retain their identity and in fact get stronger by the day as it justifies the purchase and enhances valuation.

 

When Apollo Tyres acquired the Dunlop operation in Africa, the world got to know of the new owner and the brand. The acquisition was not just for access to new technology and markets, but also for enhancement of stature and global recognition.

 

Unilever as a megalith has been built on acquiring brands through decades, right from Lipton and Brooke Bond to Dollar Shave Club and Pukka Herbs. The owner acquires brands to enter product categories and markets to cater to a wider customer base. This helps in offering its existing portfolio to the same customer in a far more efficient manner. Therefore, the acquired brands not only remain but remain stronger than before!

 

Independence

This is the second most crucial element of anxiety for the acquired brand. In most cases, due to the business pressures of bringing economies of scale and quicker returns on investment, the new owner, while retaining the identity, wants to ‘commonise’ aspects of research, supply chain, production, blueprints, operating systems and even in some cases, manpower. I could use the same assembly line for making Lifebuoy and Lux and as long as it does not matter to the customer, it is perfectly fine!

 

However, as each brand has [supposedly] its own distinct DNA, mature owners let each acquired brand retain its independence of thought and operation. It is a function of the industry. And in some cases, the market realities make the owner realise the need to allow a level of independence to ensure business success.

 

Martin Sorrell did this pretty well with all the agencies WPP acquired over the years, though the backend operations might have been streamlined into one. Rajeev Chandrasekhar learnt the importance of independence when he acquired Asianet in 2006. He wished to mould its narrative into his own thinking but realised that it would lead to serious loss of viewership that enjoyed Asianet’s left-of-centre editorial stand. He let Asianet retain its editorial independence and in fact sold it off to Star India in just two years’ time. The case of Thums Up retaining its position under Coca-Cola ownership is another ‘toofani’ one!

 

On acquiring Mobil in 1999, not only was the independence of the Mobil brand assured but the new organisation itself was called ExxonMobil! This obviously sends out positive signals not only to the markets but also the employees of the acquired brand about retention of both identity and independence.

 

Integration

Even if the new owner preserves identity and independence of the acquired brand, things can just fall apart due to flaws in integration. This is the third and most critical aspect of a change of ownership, especially if the new owner has existing interests in the same industry or field.

 

Mega-mergers and acquisitions have failed due to faulty integration. DaimlerChrysler is a case study. ESPN Star Sports was another. There are many more around us. The basic human nature is of control and command and one individual always wants to have the upper hand over another, especially of the latter is an acquired brand. Making the acquired brand feel welcome and taking extra precautions not to ruffle sensitivities is important. It is indeed tough to shed one’s ego of being the owner or the bigger brand. The other side of the coin finds the acquired brand behaving irrationally defensive, protective, and sensitive about the smallest of issues.

 

I personally experienced this is Maruti Udyog [then] as it was transitioning to Maruti Suzuki. We realised that the Japanese would call the shots very soon and many of us, including myself, behaved rank silly with our counterparts in Hamamatsu on numerous occasions.

 

New ownership, either through change in shareholding, a merger or a buy-out is always filled with an expected dose of uncertainty for any brand. So must it be inside NDTV right now. I personally think it will be business as usual for the brand. The new owner gains in stature in the global media circles now by acquiring a respected media house. And Adani will never tinker with its ethos for its own good.

 

Seventy-eight years ago, even though under the ‘ownership’ of Nazi Germany, a certain Hermann von Choltitz chose to disobey Hitler’s direct order to destroy Paris and instead handed it over intact to the French resistance forces. Brand Paris was kept intact!

 

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