Blurred vision on Zee’s channel - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Blurred vision on Zee’s channel

May 11, 2000

The market seems to have reacted negatively to the news that almost 65% of Zee’s operating profit have come from the sale of a part of library to its sister concern Asia Today Ltd. (ATL). Another interesting factor is that the effective tax rate for the company has fallen to 7.3% (from the level of 24% last year). The company does not seem to have provided for tax on the sale of the library. The company has not provided a clear explanation of the tax provision itself. Perhaps the only possible explanation could be that the company has treated the part sale of the library to ATL as exports and hence the company has claimed a tax exemption on the same.

More significantly, however, the company has drastically scaled down its American Depository Receipts (ADR) issue from the level of $ 1.5 bn (Rs 66 bn) to a level of $ 250 m (Rs 11 bn). A part of the capex requirement is now to be met through the sale of a 10% stake in Siticable, its cable venture.

The company has reportedly valued its cable business at $ 250 per home and with a reach of over 4 m homes the valuation for the company would work out to around Rs 44 bn. This works out to around 75 times the company's March 2000 turnover. (Siticable has reported a revenue of Rs 590 m for March 2000. One is however not sure whether the company's share of revenues from Siticable's joint ventures with individual cable operators have been consolidated. If one calculates the revenues based on Siticable's subscribers the total revenues works out to over Rs 11 bn assuming that 70% revenues accrues from subscribers and 30% from advertisers. In that case the valuation comes to around four times its annual revenues.) A 10% stake should logically fetch the company around Rs 4.4 bn.

Subscriber base (in million homes) 4.0
Subscription revenue (in Rs bn) 9.0
Advertisement revenue (in Rs bn) 2.7
Total revenues (in Rs bn) 11.7

Note: Subscription revenue has been calculated at Rs.150 per month for 4.0 mn subscribers.

Thus the total funds that the company would be able to garner would be around Rs 15 bn (Rs 11 bn from the ADR plus Rs 4.4 bn from the sale of the stake in Siticable) almost a fourth of what it had originally planned. It would be interesting to see how the company manages it funding requirement.

Equitymaster requests your view! Post a comment on "Blurred vision on Zee’s channel". Click here!


More Views on News

ZEE ENTERTAINMENT Announces Quarterly Results (1QFY21); Net Profit Down 94.5% (Quarterly Result Update)

Sep 1, 2020 | Updated on Sep 1, 2020

For the quarter ended June 2020, ZEE ENTERTAINMENT has posted a net profit of Rs 292 m (down 94.5% YoY). Sales on the other hand came in at Rs 13 bn (down 34.7% YoY). Read on for a complete analysis of ZEE ENTERTAINMENT's quarterly results.

ZEE ENTERTAINMENT Announces Quarterly Results (3QFY20); Net Profit Down 38.0% (Quarterly Result Update)

Jan 24, 2020 | Updated on Jan 24, 2020

For the quarter ended December 2019, ZEE ENTERTAINMENT has posted a net profit of Rs 3 bn (down 38.0% YoY). Sales on the other hand came in at Rs 20 bn (down 5.5% YoY). Read on for a complete analysis of ZEE ENTERTAINMENT's quarterly results.

ZEE ENTERTAINMENT 2018-19 Annual Report Analysis (Annual Result Update)

Sep 9, 2019 | Updated on Sep 9, 2019

Here's an analysis of the annual report of ZEE ENTERTAINMENT for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of ZEE ENTERTAINMENT. Also includes updates on the valuation of ZEE ENTERTAINMENT.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 28, 2020 (Close)


  • Track your investment in ZEE ENTERTAINMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks