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ZEE TV GETS SHAREHOLDER NOD, THREATENS TO SUE STAR TV

The extraordinary general meeting (EGM) of shareholders convened by Zee Telefilms (ZTL) on 26 March in Mumbai was a relatively smooth affair for chairman Subhash Chandra. The proposals mooted by the management to amend the company's memorandum of association to help it diversify into a slew of media-related activities, increase its authorised equity capital and allow it to leverage itself more got the shareholders' nods.

The thinly attended meeting had Chandra holding forth like never before. He wants to steer ZTL into film production, DTH, pay television, cable TV distribution, Internet services, cellular telephony, telegraphy, satellite services, earth stations, radio, terrestrial television, theme parks, multiplexes, print media, product placement in television programming, animation studios, and broadcasting consulting. "It's not as if we are going to do all of this overnight. We are seeking a wide canvas, as we can't change our memorandum every now and then. Our focus is to get this company ready for convergence. Initially, we will ride and lead the digital revolution that is hitting India," he informed shareholders.

He said it is subscription revenues, which he is hoping to garner through his digital strategy and a direct to cable operator (DTO) service. "Rs 45,000 million in subscription revenues is not coming our way while all television channels are fighting for Rs 18,000 million of media spend."

A digital bouquet of eight to 10 channels is to be offered to cable operators and the company is in talks with French pay TV firm Canal Plus for this service, he added. Gujarati, Marathi, Punjabi, Tamil are some of the regional languages that ZTL is looking at closely for its new services. "The programming cost will be relatively low as we will be dubbing earlier Hindi programs, which were successful on Zee TV, in these languages," he said.

ZTL has, however, got funding totaling Rs 700 million sanctioned from one of the leading finance institutions, while Rs 500 million will be raised through internal accruals for the Rs 12,000 million DTO project. The money will be used to purchase digital equipment.

The new channels will also form part of a direct-to-home project, which Chandra is working hard on cobbling together. "I have options on several satellites. Singapore Telecom's ST-1 is just one of them," he said.

He added that ZTL had appointed a firm to do a valuation of the Zee Network over the past few months. And the preliminary report showed that its domestic business was valued at Rs 15,000 million while its international operations - in the UK, US and south Africa currently - were valued at Rs 24,000 million. Chandra said there was a plan to merge the international ventures into ZTL. Hence the company's authorised equity capital was being hiked to Rs 750 million from Rs 500 million.

He said: "No fresh shares are to be issued. But if we merge all our ventures, the equity capital will go up. We are cushioning for a future merger." Chandra and associates are the majority shareholders in all the Zee ventures internationally and a merger will definitely benefit them in a big way.

A shareholder needled him about Zee TV's on-off friction with the Star TV Network. Chandra responded sharply: "We have a 50% equity stake in Asia Today Ltd, the uplinking company in Hong Kong with Star having the remainder. We were in talks to resolve our disputes and wanted to take over Star TV's India operations, but things did not work out. We are very upset by the violation of the programming agreement by Star TV on Star Plus. There is too much Hindi programming on Star Plus, much beyond what has been agreed upon by us. We will take them to task for this. We will not let them go scot-free. If they don't comply with the agreement, we will send them a legal notice, and then take them to court."

Apparently, a legal notice is to be issued in London in the near future.

Chandra revealed that the Zee Network was launching a sports channel which will be 51% owned by ZTL, with a third party bringing in some equity. "The rest of the project will be funded by debt."