Zee Telefilms picks up 50% stake in Ten Sports

MUMBAI: Zee Telefilms Ltd. has acquired 50 per stake in Ten Sports in an all-cash deal for $57.15 million.

Confirming the development Essel Group CEO of corporate strategy and finance Rajiv Garg said, "The acquisition has been made with the enterprise value of Ten Sports at $114.3 million."

Ten Sports was in prolonged discussions with Sony Entertainment Television (SET) India, but talks were called off as differences on valuations could not be ironed out.

Zee will have controlling interest in Taj TV as in the seven-member board, it will have four representatives while Abdul Rahman Bukhatir (Taj TV promoter) will have three.

Zee has the option to hike its stake in Taj TV after 2009. The price of the balance 50 per cent will be decided at that stage by the two companies and an independent valuer.

"This acquisition is an important step from Zee towards consolidation in the media industry. We are confident that this will add significant value for the shareholders of Zee. The acquisition of a stake in Ten Sports not only gives us a strong foothold in the arena of sports broadcasting across Asia but also strengthens our operations in the Middle East.

"I have known Bukhatir for some time now and have the greatest respect for him as a businessman and his leadership as one of the most successful conglomerates in the Middle East and more particularly, the achievements that he has had in the areas of manufacturing, retail, construction, and especially the way he has popularised cricket in the Middle East. I am certain that our joint partnership will result in a mutually beneficial relationship," said Zee Telefilms chairman Subhash Chandra.

Taj TV's average annual revenue for the next three financial years will be around $50 million, Zee said in a statement today. The average annual EBITDA is expected to be $14 million during this period. The Taj TV financial statements shall be consolidated on a line by line basis in Zee?s books.

Ten Sports operates separate beams in the Middle East, Pakistan, Sri Lanka, Bangladesh and Hong Kong. Besides, it has rights to leading cricket properties like Pakistan Cricket Board, Sri Lanka Cricket Board and the West Indies Cricket Board. "These rights combined with the BCCI neutral venue rights that Zee Sports has, creates the single largest repertoire of cricket programming. Among the other sports, Ten Sports also has rights to the UEFA Champions League, WWE, US Open, Hockey World Cup, which rate amongst the most popular programs in India. Zee Sports also has the rights to Indian football, Davis Cup, WTA, Italian Serie A. Both the sports channels will be able to leverage these properties to its maximum potential across both the platforms," the release said.

Ten Sports is distributed by SET-Discovery's One Alliance and is guaranteed minimum subscription revenues.

Commenting on the deal, Bukhatir said, "Sports television is an extremely challenging business, and yet we have in a short time established ourselves as a major player. I believe that we will now take Ten Sports to unprecedented heights by joining hands with Zee and Chandra. I have the utmost respect for him as a business man and I have been very impressed by the leadership position he and his team have staked out in every line of the media business, from content to cable to DTH to international. Ultimately, I see our partnership as one which will change the industry."

Zee Sports and Ten Sports will draw synergies from each other in operating in the Asian market place. The two will work out plans to share the sports properties between the two channels. Also sharing of different language commentaries will be worked out. "This move would consolidate the number of sports broadcasters in India, thereby bringing about a price correction in the burgeoning rights fees for various sports properties," the release pointed out.

Expanding on the benefits of the deal, Zee Sports business head Himanshu Mody said,"The addition of Ten Sports gives us a significant strength, enabling further effective exploitation of all our sports properties. The operational synergies between Zee Sports and Ten Sports would be tremendous and we should be able to run the two channels at much better economies of scale."

The Zee scrip reacted positively today, gaining 3.33 per cent to close at Rs 341.65, after touching an intra-day high of Rs 345.50.

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