Zee Telefilms has acquired a 51% controlling stake in Asianet Comm., owners of the No. 1 Malayalam (a south Indian language) channel 'Asianet' in an all stock swap deal worth Rs 2 bn of ZTL shares.
The deal puts Zee firmly in the league of the state run 'Sahayadri' (till recently known as Doordarshan). Despite being the No. 1 satellite cable channel in India, Zee is way behind Sahayadri in terms of penetration across all parts of India. The deal not only gives Zee a foothold in the South but from a larger perspective, it makes it the only channel besides Sahayadri to have a bouquet of channels in every major regional language with target audience stretched across India.
It also gives Zee's Middle East operations a boost, as a large number of expatriate south Indians are based there. It will also make it a heavyweight in the direct to home (DTH) market, as the number channels it offers increases.
The deal should be bad news for Kalanidhi Maran promoted Sun TV, south India's top television (TV) network. It should kickstart intense competition for domination of south India cable television market. Till now, Asianet was in danger of losing out its Malayalam viewers to the fast growing Sun. Now the tables seem to be reversed, as Asianet is likely to turn on the heat. It is already planning a launch of three other south Indian channels to directly take on Sun. It will be aided in this by Zee's marketing and distribution strengths.
As linguistic channels are gaining popularity, advertisers are also dividing their budgets to give more focus to their target audience belonging to a particular state. So, the deal is good news for both companies, financially speaking.
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