Zee bags FM frequencies in two more cities - Views on News from Equitymaster

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Zee bags FM frequencies in two more cities

Mar 7, 2000

The Zee group’s FM broadcasting arm New Media Pvt. Ltd has bagged another two cities Chennai and Chandigarh. The period of licenses are ten year’s from the date of issue of the operational licence by the Wireless co–ordination panel. The Zee group 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 (Esselworld) 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. Zee TV 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.

The Zee group has already bagged licenses frequencies in six cities viz. Agra, Allahabad, Aurangabad, Bhopal and Calcutta. This is in competition with the likes of inter alia Reliance group’s Observer Network, The Bennett Coleman group, India Today group’s Living Media and Dabur group’s Vertex Broadcasting. In all 140 FM channels in 40 cities are being offered to the private sector.

The main purpose of the Zee group seems to build up a brand name for not only for its television channel but also for its regional channels. Zee currently has three regional channels broadcast under the Alpha brand. The Calcutta and Chennai frequencies will help the group to further popularise these channels. And the popularity of the FM could help establish both Zee and Alpha as a brand among the audience and help brand recall in the future apart from broadbasing its audience through broadcasting in regional languages.

The price that Zee has paid as a license fee for the Chandigarh city of Rs 66.5 m however seems to be on the higher side. Further with the government having the right to increase the license fees by 15% every year one is not sure about the payback period for Zee. It is quite possible that this was due to the fact that Chandigarh had a only single frequency on offer whereas in cities such as Chennai there were 11 frequencies on offer.

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