Zee plans to raise US$ 1.5 bn (apprximately Rs 66 bn) via an ADR issue
Zee TV plans to raise funds abroad through an ADR issue.
The Zee group reaches 140 million people in 25 million homes in India and another 70 million homes in 15 million homes overseas. It covers about 22-23% of cable homes on an all India basis.
As and when the issue would go through, it would enable Zee to get an international listing as well as an international profile, help attracting foreign partners such as Viacom (which owns the children’s channel Nickelodeon as well as the music channel MTV) and above all garner a much larger of quantum of funds than it could ever have got through a private placement.
With media stocks emerging as the favourites worldwide Zee is well placed to cash in on the IPO craze on the Nasdaq. And if the price movement of Infosys is any indication this could propel the movement of the stock in the domestic market itself.
Zee also has plans to venture into movie production and setting up multiplexes. At present, the cost of producing a blockbuster movie ranges between Rs 50 million and Rs 100 million. If Zee has the funding in place, the movie production business would open up other revenue streams such as video rights, cable rights, satellite rights apart from providing content for its own channels both in India and abroad.
The company has recently made a placement to international investment banker Goldman Sachs by divesting 2% of its equity at a price of Rs 1000 per share. The company is following in the footsteps of international studios such as Time Warner, Disney, News Corp etc. that follow the dictum that the value of a good entertainment product grows with time.
It can be released on video, its satellite rights can be sold and a sound track album can be released. Also, it can play on local and overseas cables, it can be merchandised by selling T-shirts and related products, it can be marketed on the internet - and in the future it can be recycled yet again to a nostalgic audience. Hence a media company ought to own the platforms through which the product can be distributed across the world.
Zee already has a television production facility, a channel (Zee TV), a cable operation (Siticable), music rights of some movies (through Zee Music) and a theme park (Esselworid) in place. It has recently ventured into publishing and plans to venture into film production apart from introducing a sports channel apart from a possible tie-up with Viacom (as mentioned above).
Analysts have rated Zee TV as a buy, primarily because of the jump in revenues post the incorporation of the revenues that formed part of ATL earlier. Also the company has plans for a bouquet of channels which would all contribute to the revenue stream in the future
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