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Zee to pick 51% in Asianet for Rs 400 cr

Competition is hotting up among regional satellite channels. Subhash Chandra, who has gained a toe-hold in regional channels with a boquet of launches, is now entering the southern market by acquiring a 51 per cent stake in Asianet Communication, a popular Malayalam channel.

In an announcement on Wednesday, Zee said it has valued the deal at Rs 400 crore ($92 million), to be paid for in shares of Zee Telefilms Ltd (ZTL).

The alliance will give ZTL a headstart in consolidating its entry into the South Indian regional language channels, BR Jaju, executive president-finance and global CFO of Zee Network, said in a statement here.

Asianet Communication is emerging as a major television broadcast brand south of the Vindhyas and the Middle East. With Asianet already having established itself in the Malayalam language, it now plans to launch three more regional channels—Telugu, Kannada, and Tamil. It is shortly entering the Karnataka market.

“The alliance in one stroke will bring the southern markets within the fold of ZTL,” it said in a statement.

The memorandum of understanding provides for Asianet’s chairman and managing director Raji Menon, an NRI, representation on the board of directors of ZTL, and Zee chairman Subhas Chandra’s representation on the Asianet Communication board.

Zee broadcasts in several Indian languages, and has recently launched English language channels to expand its reach. ZTL’s shares ended Rs 30 up at Rs 1,063.75 on Wednesday on the Bombay Stock Exchange.

“Zee was a very strong player in the Hindi segment, but it had poor reach in southern India. This deal will give it instant access to southern audiences,” said Chetan Ahya, senior analyst at BNP Prime Peregrine.

Last Monday ZTL’s shareholders approved the company’s plans to raise up to $1.5 billion through American Depositary Receipts (ADR). The road show for the ADR is expected to start som Reliance e time in June. The company has firmed up plans to launch a sports, an educational, and an international channel of traditional Indian interest, like yoga, in the second half of 2000. Zee will have nine channels in its bouquet by June, and 18 channels by the end of the year. This will be a prelude to the direct-to-home (DTH) service of the future.

The media company plans to expand its content production, Internet access, e-commerce, Internet portals, and cable network upgradation, including installation of fibre optic network activities.

FE Report