New mantra at Zee: 'Interactive Education'

Subhash Chandra (promoter - Zee network) is promoting a new company, Zee Interactive Learning Systems (ZILS), backed by investments to the tune of Rs 1 bn over the next three years. The Zee network comprises Zee TV (India's leading private satellite Television channel), Asia Today (which caters to USA, Europe and Africa viewers), Zee Music, Alpha regional channels, Siti Cable and a broadcasting company, Zee Multimedia Worldwide. The network is in a consolidation mode. It recently bought over Rupert Murdoch's 50% stake in Asia Today, Patco and Siti Cable for a consideration of US$ 296.5 m. In a bid to restructure, it hived off Zee Education (ZED) as a 100% subsidiary.

ZILS will be a 100% subsidiary of Zee Telefilms. It will partly be financed by internal accruals and partly through a loan by parent Zee Telefilms. Zee Education, comprising a nation-wide network of 250 learning centres, will become a division of the new company and provide it with the ground level support. ZILS will provide education and learning solutions and launch a dedicated learning channel by June 2000. It has tied-up with Indian Space Research Organisation (ISRO) for university programs. The company expects to earn a profit of Rs 1 bn annually on a turnover of Rs 5 bn in the next 5 years.

The move is the latest in a series of initiatives taken by Zee to consolidate its operations. The Zee network has already announced plans to develop its Siti Cable infrastructure to make it internet-based. Zee is known as a leading entertainment provider. It now aims to become a leader in intellectual programming by targeting children, parents and professionals.

The strategy to dominate the entertainment and education industry is very challenging. The Indian population comprises people from different cultures and this necessitates a larger degree of customisation in the content. The network will have to promote separate brands, which will be a drag on its resources and could lead to deterioration in margins.

Media conglomerate Rupert Murdoch's Star network has also announced huge investments in Internet ventures and will be going all out to capture the Indian viewer. Sony TV is also breathing down Zee's neck. So, the plan though feasible, will not be a cakewalk for Zee. The battle between Zee, Star and Sony has just started. The coming year is likely to see a full-scale war. But in all this, the winner will be the Indian viewer, with a range of quality channels to choose from, competitive tariffs and access to Internet. And above all this, a dream that education finally reaches every nook and corner of this country, might just come true.

Market view:
The stock has been rated as a 'Long term Buy' by analysts because of the company's domination of the electronics media business in India, which has tremendous growth potential.