Zee Telefilms Limited, India's largest private sector (satellite) Television network, has announced plans to cater to the Punjabi and Bengali audiences by November 1999. This will increase the number of channels in the Zee basket to eight. Till now, Zee was only catering to the Hindi speaking mass and only recently it launched a Marathi channel. The launch of these channels will benefit the company in two ways:
Linguistic channels are gaining popularity with the local viewers. Advertisers are also dividing their budgets to give more focus to their target audience belonging to a particular state.
As the spread of Zee brand increases, it will give Zee a chance to consolidate its direct to home (DTH) plans to develop pay-per-view market.
The Indian Television media is dominated by state run Doordarshan, followed by Zee and Sony. As the Southern India TV market is already dominated by SUN TV, it makes sense for the company to target the next bigger mass of non-Hindi speaking population i.e. the Bengali's and the Punjabi's. The Bengali channel will also give it access to the Bangladeshi viewers and hence Bangladeshi advertisers.
However, given the smaller size of audiences in these markets, it is uncertain whether Zee would be able to generate the advertising support that is required to sustain such a venture.
In another related development Zee's proposed merger with Mauritius-based Zee Multimedia has been approved by the Reserve Bank of India (RBI). Zee Multimedia owns Asia TV which caters to Hindi speaking Asians in the UK, South Africa and the USA. As Zee Multimedia has a bottomline in excess of Rs 1.2 bn, the merged company will benefit from improved cash flows, which can be used to fund the new ventures of the Group.
Though the stock has appreciated by more than 60% in the recent rally, it is still rated as a 'long term buy' by analysts based on the company's position as a leading player in the TV market and strong earnings potential. Analysts are also of the view that, the company can become a Internet service provider (ISP) as it has a well established cable network through its associate company 'Siti Cable'.
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