Cable TV

Zee rejig to improve bottomline: Chandra

NEW DELHI: Subhash Chandra, chairman of the approximately Rs. 13 billion Zee Telefilms, feels that after the restructuring announced Wednesday, the company's bottomline would be "healthier", though top line growth might be cropped as loss making businesses have been hived off into separate companies.

Talking to CNBC TV18, Chandra also said that the news operations and the regional channels, which were hived off into Zee News Ltd, will be profitable with a turnover of Rs 3 billion.

The cable TV distribution business of Siti Cable (again hived off into WWIL) will be a no-profit-no-loss venture that generates revenues of Rs 1 billion at the moment.

"They (Zee News and cable business company WWIL), will be profitable. The quarter results of these entities will come out on 28 April, along with the consolidated results.

"WWIL may not be profitable, but there will not be any losses. I think the revenue line for WWIL would be about Rs 100 crore (Rs 1 billion) at the moment," Chandra explained.

Yesterday, Zee Telefilms, India's largest vertically integrated media company, announced splitting of its broadcasting business into three entities -- news operations and regional language operations (Zee News Ltd), broadcast and content creation, and Siti Cable, which will also include the initiatives on the CAS front (Wire and Wireless India Limited or WWIL).

The direct consumer related business of ZTL and Dish TV, the country's first private sector DTH service, have also been separated and subsumed into ASC Enterprise Ltd, which is the DTH licence holder.

According to Chandra, foreign investors have evinced interest in the cable and DTH business of the group.

"We are being approached a lot for cable and Dish TV (country's first private direct-to-home service) businesses. However, not as many for the entertainment or the news content business. But we are open for those also," he added.

Pointing out that the Dish TV operation is likely to be listed on the stock exchanges within a few weeks' time, Chandra said, "Recently, because of this restructuring process they (Dish TV) amended their business model as well, which should be a very aggressive business model. So we haven't been able to do the valuation of these different assets sitting in different entities like Zee Telefilms and ASCEL yet."

Dish TV's operations are managed by Entertainment Era Network Ltd, while Zee Telefilms has a content supply deal with it. Once the regulatory and other permissions come through, the DTH business will be consolidated under "Dish TV Ltd or something (on those lines)," Chandra said.
Asked about the equity base of the two new proposed companies, Chandra said that while that of Zee Telefilms Limited will remain unchanged at Rs 410 million, that of Zee News Limited will be approximately Rs 250 million.

The equity base of the cable business under WWIL will be about Rs 250 million, says the man who has built up a business empire ranging from real estate to media to packaging after starting out exporting rice to the erstwhile USSR in the 1970s under the Essel brand name.

Dwelling on the valuation of the cable business being carried out under Siti Cable, a 100 per cent subsidiary of Zee Tele, Chandra said, the value of Siti Cable ought to be in the region of $ 800- $ 900 million.

Zee Telefilms, according to Chandra, bought back 50 per cent of Siti Cable from News Corporation in 1999-2000 at a valuation of Rs 15 billion.

"Subsequently it (Siti Cable) was valued at Rs 2500 crore (Rs 25 billion). We are getting paid for about a million homes (now). So, if you take 1 million homes' valuation at $ 500 per subscriber, that is $ 500 million plus if you take the rest of 5.8 million (subscribers) even at $ 50 valuation. So that makes this entity at about $ 800-900 million.on Rs 30 crore (Rs 300 million) equity basis, but the investment was of about Rs 500 crore (Rs 5 billion) in this business," Chandra explained.

Asked about the prospects of Zee Sports, Chandra said as a corporate entity and business Zee Telefilms would be left with the sports channel after the restructuring is completed.

Pointing out that Zee Sports is "still at a developmental stage," Chandra said, "I will not call that a loss making entity. There are investments in it. Other than that, all the businesses are profitable in ZTL. The new start-ups of regional channels in Telugu, Kannada, etc are all a part of Zee News Ltd now."

The Zee Telefilms scrip closed on the Bombay Stock Exchange at Rs 242.50 after opening the day at Rs 239.55.

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