MUMBAI: Zee News Ltd (ZNL) will work out an aggressive growth plan to achieve a revenue of Rs 5 billion within five years as it readies to give up its highly successful regional general entertainment channels to group company Zee Entertainment Enterprises Ltd (Zeel).

The surgery can be very painful. ZNL's dependence on the GECs is apparent with the regional entertainment business contributing Rs 3.4 billion out of the company's FY'09 turnover of Rs 5.2 billion.

For the first half of this fiscal, the figures are no different. The GECs accounted for Rs 1.87 billion in a total revenue of Rs 2.98 billion. "We need to make up for the revenue and bottomline loss. We are coming out with a long term growth plan," says ZNL chief executive officer Barun Das.

Hiding under the protection of the regional GECs, ZNL will now have the freedom to build itself as a TV news powerhouse. "We were not drawing synergy from each other. The GECs were getting prime focus. We can now build our own destiny," says a senior executive at ZNL.

ZNL gets to keep Zee Tamil and Zee Punjabi while shunting out a major part of its Rs 2 billion debt to Zeel. Zee Tamil, launched as a GEC, will limit its losses as it predominantly becomes a news channel.

The trimmed-down Zee News Ltd. will still have the largest news footprint, beating rivals such as Network18 Group, TV Today, NDTV and Star News. That, however, does not reflect on the revenue front as Zee News, the flagship channel, is not the leader in the Hindi news genre. The news business fetched a revenue of Rs 1.8 billion for the fiscal ended March 2009 and Rs 1.1 billion during the first half of FY'10.

ZNL will have to continue incubating Zee 24 Gantalu (Telugu news channel) and Zee News UP. Zee News (Hindi general news channel), Zee Business (Hindi business news channel) and Zee Taas (Marathi) are profitable but scaling up will be the main focus. The two other channels the company is involved in is 24 Ghante (Bengali news channel where it has a joint venture stake) and Zee 24 Ghante Chhattisgarh (franchisee model).

ZNL will have to build multiple growth engines down the road. Crucial would be the English news channel launch, a space that is already occupied with some authority by Times Now, CNN IBN and NDTV 24x7.

In the new order where ZNL gets to exist as a pure play news organisation, the plan will be to launch city-centric and regional channels. The incremental cost of these channels will be low and ZNL could discover joint venture partners down the road. The company also could scale up its franchisee model, though it is not an easy path to travel far and wide.

The expansion route through these channel launches, however, may not be viable at this stage as carriage fee costs have become exorbitant.

Existing ZNL investors, though, need not bother as they will get Zeel shares in line with the share-swap ratio that will be announced by 29-30 October. The ZNL scrip, in fact, is expected to climb temporarily due to this. The task cut out for the management is to sustain this momentum as ZNL's market cap is set for a major overhaul after the exit of the entertainment channels.

Amid this mammoth task of building a news empire, guess what? The game can change quickly if ZNL gets a strategic investor.