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Zee Media to enter TV shopping biz via acquisition of 2 India Today firms for Rs 165.78 cr

MUMBAI: Essel Group-owned Zee Media Corporation Ltd (ZMCL), which operates a clutch of news channels, is entering the home-shopping television business.

ZMCL has agreed to acquire up to 80% stake in India Today group’s loss-making e-commerce and TV shopping entities for Rs 165.78 crore (Rs 1.66 billion) in tranches spread over four years.

zee_mediaThe move has surprised media analysts who said that TV shopping would have been a natural follow-on for Zee Entertainment Enterprises Ltd (ZEEL), the flagship entertainment broadcasting company controlled by Essel Group.

However, Zee Media has said that TV shopping holds great investment value. The acquisition would not only shorten the launch timing of the TV shopping channel but also scale up at a faster pace. Having existing broadcast operations, ZMCL will be able to derive the synergy benefits from the proposed investment.

“We had channel licence lying with us and thought that it would be good to step into the TV shopping business. Besides, there is synergy in terms of programming. We also get the e-commerce part through the acquisition,” a source familiar with the development said.

India Today group’The board of ZMCL has given in-principle approval to the acquisition of up to 80% stake in both Today Merchandise Pvt Ltd (TMPL) and Today Retail Network Pvt Ltd (TRNL).

TMPL and TRNL are wholly owned subsidiaries of Living Media India, an India Today Group entity. The companies, which are currently into losses, have been developing infrastructure for launching a TV shopping channel. They also operate an e-commerce website, www.bagittoday.com, to complement the TV shopping business.

ZMCL will initially acquire 49% stake in the companies by investing Rs 39.78 crore (Rs 397.7 million) at par value. It will have managerial and operational control over the target companies.

Subsequently, ZMCL will increase its stake by investing up to Rs 126 crore (Rs 1.26 billion) over four years, subscribing for any security convertible into equity shares of TMPL and TRNL, at par value, so that, upon conversion, the shareholding of the company becomes 80% of the fully-diluted capital of both the companies.

Incorporated on 23 Nov 2010, TMPL achieved turnover of Rs 3.84 crore (Rs 38.4 million), Rs 5.25 crore (Rs 52.5 million) and Rs 5.11 crore (Rs 51.1 million) in FY15, FY14 and FY13 respectively.

TRNL was incorporated on 20 August 2007. During financial years ended March 31 2015, March 31 2014 and March 31 2013, TRNL achieved turnover of Rs 37.36 crore (Rs 373.6 million), Rs 52.45 crore (Rs 524.5 million) and Rs 49.80 crore (Rs 498 million) respectively.