Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Zee Ent: Value unlocked… - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 8, 2007

    Zee Ent: Value unlocked…

    In the previous article we provided an overview of the business operations of Zee Entertainment. In this article we shall have a look at the demerger process of the erstwhile entity Zee Telefilms, the value unlocked and provide an overview of the businesses of the different demerged companies.

    The demerger
    The company Zee Telefilms demerged into four independent companies Zee Entertainment (broadcasting), Zee News (News Broadcasting), WWIL (MSO operations), Dish TV (DTH services) last year.

    Rationale for Demerger
    Zee Telefilms was operating in different businesses, which had a different regulatory environment and also very different competition and industry structures. A clear-cut leadership and direction for the growth of these different businesses was required which was difficult in case the company was not demerged. Tax inefficiencies were creeping in resulting in higher operating costs. Bringing all operational activities together under a suitable corporate structure with an undivided focus was the best way of unlocking shareholder value.

    Value unlocked
    A shareholder holding 100 shares in Zee Telefilms on the record date received 100 shares in Zee Entertainment, 45 shares in Zee News, 50 shares in demerged WWIL, 57 shares of Dish TV. The table below illustrates how a shareholder holding 100 shares of Zee Telefilms before the demerger gained from the demerger process. A shareholder’s 100 shares in erstwhile Zee Telefilms were worth Rs 34,100 before the demerger. The total value of his holdings catapulted to Rs 40,633 from the earlier Rs 34,100 a net gain of Rs 6,533.

    Value unlocked from 100 shares of Zee Telefilms…
    Value of 100 shares of Zee Telefilms(Pre Demerger) 34,100
    Post Demerger shareholder received  
    100 shares of Zee Entertainment 27,200
    45 shares of Zee News 1,548
    50 shares of WWIL 6,040
    57 shares of Dish TV 5,845
    Total value of the holdings post demerger 40,633
    Gain from the demerger process 6,533

    We shall now provide an overview of the businesses of the different demerged companies.

    • Zee Entertainment: We provided an overview of the operations of Zee Entertainment in the previous article.

    • Zee News: It is the largest news and regional channel network in India in terms of reach. The total news market is estimated at Rs 5.4 bn out of which the Hindi news market is Rs 4.2 bn. Zee News is the only Hindi News pay channel. Zee Marathi is the genre leader in Maharashtra and Zee News is the strong number two in North and in Metros. It is focused on linguistic markets through news and entertainment, which is approx. 40% of viewership. News and regional channels are witnessing increasing viewer-ship and advertisement share, which would benefit the company. Besides this the rollout of CAS and DTH would help the company to increase its subscription revenues going forward.

    • WWIL: WWIL is the largest Multi system operator (MSO) in India. It offers digital cable (CAS), analog cable services in alliance with the local cable operators (LCO’s). It is present in the 43 cities of India. It operates through a set of more than 4,000 local franchisee operators. It plans to rollout in 66 cities within 3 years The potential market for MSO’s is huge in India. There are expected to be 89 m homes connected to cable by 2011 (except DTH). The ARPU is expected to be Rs 470 and the operating margin is expected to be 25% translating into an industry operating margin of Rs 125 bn.

    • DISH TV: Dish TV is India’s largest direct-to-home (DTH) player with a subscriber base of 2.2 m. It is present in 4,300 towns across India, with more than 400 distributors and more than a 30,000-strong dealer network. In addition to rapid subscriber addition, Dish is looking to increase the ARPU by offering value-added services like movies-on-demand and gaming. Competition for Dish TV is on the rise, with Tata Sky offering marketing and consumer subsidies. Entry of new players such as Sun TV, Reliance and Bharti would significantly increase the competitive intensity. By 2012, the market for DTH services is expected to escalate to 25-30 m, from about 5 m currently. The DTH business requires long gestation periods for DTH operators to break even on their investments.



    Equitymaster requests your view! Post a comment on "Zee Ent: Value unlocked…". Click here!


    More Views on News

    Zee Ent: GST Short term Negative but Long term Positive (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The management believes that GST will aid the advertising spends in the long-run.

    S Chand and Company Ltd. (IPO)

    Apr 26, 2017

    Should you subscribe to the IPO of S Chand and Company Limited?

    GTPL Hathway Ltd. (IPO)

    Jun 21, 2017

    Should one subscribe to the IPO of GTPL Hathway Ltd?

    Zee Ent: Advertising drives revenues (Quarterly Results Update - Detailed)

    Aug 1, 2016

    Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.

    Zee Ent: Taxes, lower other income mar bottomline (Quarterly Results Update - Detailed)

    Feb 3, 2016

    Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)