According to reports in a leading financial daily, Subhash Chandra – promoter of the Zee group of companies is looking for a buyer to offload 25% of Zee's 100% stake in the cable network company Siti Cable. Negotiations are currently on with certain insurance companies.
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.
Siti Cable is India's largest cable network (15% market share) with a presence in 43 cities and a subscriber base of 3.5 m homes. Its current worth is estimated to be in the region of US$800 m. Going by this valuation the divestment of a 25% stake in Siti Cable would bring in US$200 m. This should take care of any cash crunch that might have arisen because of Zee's buyout of Star's stake. As per Zee-Star agreement, Zee had to shell out half of US$296.5 m i.e. US$ 149 m in cash.
These additional funds will come without the promoters losing majority stake. The company can use these funds to invest in launching new channels (regional and English) or can also use these funds to make its cable network Internet enabled.
It would have been better if a strategic foreign partner bought Siti Cable's stake. The partner would not only bring in the necessary funds, but also provide the valuable technological back up, which will speed up Siti Cable's plans to become an Internet Service Provider (ISP).
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