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Zee sets its sights on Bollywood - Views on News from Equitymaster
 
 
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  • Oct 2, 1999

    Zee sets its sights on Bollywood

    The Subhash Chandra promoted Zee Telefilms (Zee) plans to invest between Rs 300-400 m in film production for release in theatres all across the country.

    Zee (FY99 turnover: Rs 2.3 bn) is India's largest private sector satellite Television (TV) network. The company 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). It recently merged with Zee Multimedia Worldwide (ZMW), which owns and operates TV channels in Europe, USA and Africa.

    The company plans to exploit its Asia Today reach by lining up the launch of Music Asia, its music channel, in the US and Europe. In a strategic move, Zee Music will aggressively buy music rights for new releases, including rights of films produced by the parent company.

    Zee plans to sell the film distribution rights in India and abroad. By this, Zee will be deriving the benefits of consolidation in its group companies. For one, Zee itself will be a big customer for such products. Secondly, it will save on huge costs it incurs to buy new film rights. Also, its overseas business (Asia Today) will get a boost, as Zee can sell these film rights to it at a reasonable price and hence increase its viewer base abroad.

    Its overall plan seems to dominate the Indian entertainment scene and exploit its local entertainment expertise to lure Hindi-speaking viewership abroad.

    The strategy seems good on the face of it. But the success rate of films produced by Zee cannot be ascertained. In the past, the company has produced one or two films. They have met with mixed reviews. Secondly, on one hand, Zee wants to sell film rights to distributors for release across theatres in India. On the other hand, it plans to sell the same rights to Zee Network and affiliates to give its viewership a fillip. But Zee may face reluctance on part of the distributors to buy films, which they know will any be telecast on the Zee Network within a short period of time. Also, financially, Zee shareholders might lose out, if the management were to charge reasonable rates to group companies for telecasting these films.

    Market view:

    Most analysts have rated the company as a 'BUY', based on its dominance in the electronic media industry. The company's recent buyout of businesses from Star will further consolidate its position and give it the freedom to develop its overseas operations.

     

     

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