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MUMBAI:
Zee Entertainment Enterprises Ltd (Zeel) has bought out for
$56 million Resource Software Ltd’s 40 per cent stake
in Zee Studio to take complete ownership of the English movie
channel aimed at the Indian market.
The valuation of $140 million is seen by several analysts
as being highly expensive, involving one-year forward multiples
of almost 10 times revenue, 18 times operating margins and
20 times net profit. Mauritius-based Asia Business Broadcasting
Ltd (ABBL), which owns and operates Zee Studio, clocked a
revenue of $14.3 million for Fy’09. Net profit was at
$7 million while EBITDA stood at $7.9 million.
Zeel’s
earlier 60 per cent holding in ABBL was through a subsidiary
company, Asia Today Ltd (ATL). The additional 40 per cent
stake was also acquired through ATL.
With
this transaction, ATL has 100 per cent ownership of Zee’s
English-language channels – Zee Studio, Zee Café
and Zee Trendz.
Zee
had entered into a business arrangement with MGM Ltd. to launch
Zee Studio in 2000, filling up the gap of an English movie channel
soon after buying out News Corp’s stakes in the joint venture
companies to part ways with Rupert Murdoch in India.
Subsequently,
Zee snapped the business arrangement with MGM and formed a
joint venture with Resource Software Ltd, a company incorporated
in the British Virgin Islands. Zee officials have said that
Resource Software is a company that owns significant English
language programming and film library and has programme procurement
expertise, but no further details of the transaction are available.
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