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Zee in talks with Asianet minority shareholders to pick up more stake

Zee Telefilms is negotiating with three minor shareholders of the south-based Malayalam satellite network Asianet Communications to pick up additional stake in the company at a cheaper price. "We are trying to buy Asianet shares at a lower price from the minority shareholders," Zee Network chairman Subhash Chandra said.

Zee Telefilms recently acquired 61 per cent stake in Asianet from Raji Menon in an all-stock deal. Zee will issue 26.40 lakh equity shares, aggregating Rs 255 crore, for its 61 per cent stake in Asianet Communi-cations. The shares will have a lock-in period of six months. The price of each share works out to Rs 966.

According to the memorandum of understanding (MoU) signed with Asianet, Zee Telefilms has the option of increasing its stake by 12 per cent to 73 per cent within three years. "But we have no plans to have a 100 per cent holding in Asianet," Chandra said at Zee Tele-films’ extraordinary general meeting (EGM) on Thursday. The MoU also provides for paying non-compete fees of Rs 100 crore to Menon.
Zee has internally valued Asianet’s media assets at Rs 460 crore. While the television software has been valued at Rs 5,000 per hour, every movie is worth Rs 5 lakh. Asianet has a library of 4,000 hours of original programming and 1,200 movies. "The brand has also been valued," said Zee Network vice-chairman and ma-naging director Vijay Jindal informally after the EGM. The company has made substantial investments in the fiscal ended March 31, 2000, towards building brands in Zee TV, Zee Cinema, and Zee News. It also recently negotiated with some foreign studios to strengthen the content of its English movie channel Zee Movies.

Zee has raised $50 million from international banks on the strength of Asia Today Ltd’s (ATL) assets. "ATL will be the vehicle for our overseas expansion. It gives us the flexibility to raise funds from abroad," Chandra said. Zee will have a 30-channel bouquet by the end of 2001. This will include third-party channels which the network will distribute in the country. The company expects to earn Rs 250 per household through "converged cable". "We will be spreading out in 20 cities this year. By next year, we will be in 35 cities, and in four years in 100 cities," Chandra said.

Zee will have a minimum revenue of Rs 10,000 crore by 2005, and an operating profit of Rs 3,000 crore, he added.

Zeenext.com has launched 48 e-channels and 56,000 registered users, Chandra said.

Sibabrata Das