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Zee Media eyes expansion via channel launches or acquisitions

MUMBAI: Zee Media Corp Ltd (ZMCL) will continue to focus on increasing its bouquet of channels to grow revenues and strength of the company.

ZMCL will weigh new channel launches or expand through acquisitions. By pursuing this strategy, it believes it can enhance the company’s business, revenues and profitability.

“We believe that the strength of our brand and existing relationships and goodwill will help the company in executing its acquisition strategy more effectively,” ZMCL said in its draft letter of offer filed with the market regulator Securities and Exchange Board of India (SEBI) for a rights issue.

ZMCL, which houses Essel Group’s news and current affairs channels portfolio and English daily dna, proposes to raise Rs 200 crore (Rs 2 billion) via a rights issue. While the company has not disclosed the utilisation of the proceeds of the rights issue for launching a new channel, it has stated the expansion route could be in adding channels to enhance its presence in the television news market.

In the last fiscal (FY 2013–14), ZMCL launched two news and current affairs channels—Zee Rajasthan Plus (later renamed as Zee Marudhara) and Zee Kalinga. In December 2014, the company also completed acquisition of 100 per cent stake in Maurya TV Pvt Ltd.

The new channels are loss making as of now but are making steady progress. There seems to be a growing trend of state-specific, local news channels, leading to further fragmentation of the ad pie. While ZMCL acquired Prakash Jha’s Maurya TV for Bihar and Jharkhand markets and launched Zee Kalinga for the Odisha market, the Sahara India group launched state-level news channel ‘Samay Rajasthan’.

“There can be no assurance that the new channels will be successful. In addition, new channels have a long gestation period to achieve break even and market share of viewership. In the event of any failure of any new channel, the company may have to write off the losses incurred in the production and broadcast of the channel or invest monies to re-structure, refresh or modify the content of the channel or launch a new channel targeting some other region or viewers,” ZMCL cautioned.

In 2013, viewership share of regional news stood at 3.6 per cent, lower than the 3.8 per cent in 2012. But while the growth may have slowed down marginally, ZMCL believes that the regional news genre is still a high growth space.

Incidentally, ZMCL has been toying with the idea of launching an English general news channel for a long time, a missing piece from its otherwise strong news network. The company also owns DNA, and an English news channel will only complement the two offerings.

With the recent launches and acquisitions, the company now has presence in whole of Hindi speaking markets with national (Zee News) as well as regional channels (see list). It also has strong presence in Maharashtra, West Bengal and now Odisha too.

ZMCL channels

The missing pieces, apart from English, include a Gujarati news channel, and South Indian-language channels. However, it is pertinent to note here that ZMCL has already burnt fingers with the launch of Telugu news channel Zee 24 Gantalu. The channel did not work and ZMCL had to pull the plug.

Also read:

Zee Media purchases Maurya TV for Rs 7.79 crore

Is Zee Media raising Rs 200 crore via rights issue to launch news channels?