According to newspaper reports, media giants Time-Warner and Viacom are in the fray for picking up a stake in Zee Telefilms Limited.
Zee Telefilms, India's largest private sector satellite television (TV) network beams a portfolio of 7 channels to more than 75 countries. The company has also promoted Zee Music, Zee Education (ZED), and ZED Institute of Creative Arts (ZICA). The company is in a massive restructuring mode. It recently decided to hive off Zee Education as a separate entity. More importantly, the company was able to wrest 100% control of the Zee network and Asia Today (Zee's broadcasting company) from Rupert Murdoch's Star TV.
Zee had earlier announced that the company would offer up to 10% stake to a strategic foreign partner or a group of foreign media entities. With Zee and Star finally parting ways, the offer is mutually beneficial for the company and the interested parties. Zee on its part will be able to fill the technological void created by exit of Star. The deal will also bring in massive cash inflow (approximately Rs 9 bn at current price levels), which it may utilise to fund its acquisition plans as well as increase the number of its channels.
For media giants like Viacom and Time-Warner, the deal will allow them a foothold in India's satellite TV segment. In future, synergies may develop, as they can bring in English channels from their own portfolio and offer it along side Zee's channels. Zee has for long wanted to add an English channel to give its network the depth to consolidate its Direct To Home (DTH) plans to develop pay-per-view market. Such a move will give these foreign media majors ready access to 11 m homes, which is Zee's current coverage.
Analysts have rated the stock as a 'LONG TERM BUY' because of its dominance in the electronics media business in India. The company's recent buy out of Star's stake, its consolidation plans and its foray into the Internet Service Provider (ISP), have further strengthened its position in the market.
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