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Zee Media and ZEEL’s re-organisation of TV channel distribution biz

MUMBAI: Zee Media Corporation Ltd (ZMCL) will save 7% as commission fee from its subscription revenue when it shifts to sister company Zee Entertainment Enterprises Ltd (ZEEL) for the distribution of its channels.

Under the earlier arrangement, ZMCL was paying 14% of its subscription revenue to Taj Television India as commission fee for distributing its channels. The company had a distribution deal with Taj Television, a wholly owned subsidiary of ZEEL, for a period of three years till 31 March 2017.

ZMCL, however, has terminated its distribution deal with Taj Television and its board has accorded in-principle approval for entering into a new agreement for the distribution of TV channels.

zee_mediaAs per the new deal, ZMCL will share 7% subscription revenue with ZEEL as commission for distributing its channels.

Under the earlier three-year agreement effective 1 April 2014, Taj was to provide distribution services to ZMCL on principal-to-principal and revenue-sharing basis by retaining 14% of subscription revenue of the TV channels of the company. ZMCL’s current and future television channels would be distributed by Taj.

However, late last month, ZEEL decided to move the TV channel distribution business from Taj Television to itself. The measure, taken due to business and tax reasons, will come into effect from 1 May.

For ZMCL, the shift will mean a revenue gain. In FY15, ZMCL earned subscription revenue of Rs 113.54 crore (Rs 1.14 billion) from its clutch of news channels. Taj Television would have, thus, got Rs 15.4 crore (Rs 154 million) as commission fee.

In the first nine months of FY16, ZMCL has reported subscription revenue of Rs 83.8 crore (Rs 838 million). The company is yet to announce its fiscal fourth quarter results. Taj Television would take 14% of ZMCL’s subscription revenue in FY16.

Now under ZEEL’s distribution, ZMCL will part with 7% of its subscription revenue. The English news channel named WION (World-Is-One-News), scheduled for launch in August, will also be distributed by ZEEL.

The distribution team, housed in subsidiary company Taj Television, will move to ZEEL. The re-organisation of TV channel distribution functions within ZEEL will have no impact on the team structure. It is learnt that Rajesh Sethi will continue to head the distribution functions and sports broadcast business of Zee.

ZMCL’s ad sales functions will be handled by Zee Unimedia Ltd, the new subsidiary of ZEEL set up to look after the ad sales of the Zee group’s businesses across broadcasting, digital and print.

The commission structure to Zee Unimedia is being worked out. As ZMCL’s ad sales team will be absorbed by the new company, there will be a cost-saving on that aspect. There will be a charge for services rendered, and Zee Unimedia will be paid a commission by ZMCL from the advertising revenues. This will be based on a slab structure, a source said.

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