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ZEEL eyes acquisitions in media tech space; Mihir Modi to manage new venture investments

MUMBAI: Zee Entertainment Enterprises Ltd (ZEEL) is eyeing a series of small-ticket acquisitions in the media technology space.

The company is in advanced talks to snap up a media technology start-up, a source said. He, however, did not reveal the name of the company due to reasons of confidentiality.

ZEEL has already acquired an 80% stake in tech start-up Margo Networks for Rs 75 crore and a 12.5% equity in Bangalore-based Tagos Design Innovations, an in-video discovery platform, for $2.5 million (Rs 16.15 crore).

“The plan is to have stakes in a bouquet of start-up entities. This will help ramp up the digital business,” the source said.

ZEEL will move its chief financial officer (CFO) Mihir Modi to a new position to manage the company’s new venture investments and incubation, he added.

The company is in the process of recruiting a new CFO. Modi will most likely be in ZEEL until the end of this month.

Modi will be on the board of these start-up companies and guide them in scaling up their businesses, the source said. His exact designation could not be ascertained.

Modi will get to guide Margo Networks and Tagos immediately after moving out of ZEEL. He will be involved in growing these companies to a bigger size.

Modi could not be contacted for his comment.

With ZEEL’s investment infusing capital in Margo, the plan now will be to scale up the company. If required, ZEEL will pump in additional investments to fund Margo’s growth.

ZEEL’s Rs 75-crore investment values Margo at Rs 95 crore. Explaining the rationale for the acquisition, ZEEL had said that “the technology developed by Margo has strong synergies with the current business of the company”.

Margo has developed a technology to set up a server and complete infrastructure to enable digital consumption. This has the potential to drive up digital content consumption.

The company is developing a next-generation push content delivery network “which intends to set up Edge Servers as close to the delivery destination as possible”. The plan is to optimise high-speed delivery of content to end consumers by using big data methodologies, analytics, microservices architecture, caching algorithms and machine learning techniques.

Margo Networks was incorporated on 17 August 2016. Its authorised share capital is Rs 10 lakh and its paid-up capital is Rs 1 lakh. Directors of Margo Networks are Ripunjay Mukesh Bararia, Devang Yogesh Goradia, Rohit Suresh Paranjpe and Mehul Dinesh Patel.

The stake buy in Tagos will help ZEEL scale up revenues of its over-the-top (OTT) business. Tagos’ flagship product is Charmboad, a platform that allows users to put a visual bookmark within videos, TV and movies. In FY16, Tagos posted net loss of Rs 45.83 lakh on a revenue of Rs 12.54 lakh.

In June, ZEEL agreed to acquire the remaining 49% stake in India Webportal for $30.7 million (Rs 200 crore) to take full ownership of the digital asset.

Floated as a joint venture between ZEEL and US digital media publisher Penske Media Corporation in 2010, India Webportal operates websites such as India.com, Cricketcountry.com, Bollywoodlife.com, OnCars.in, BGR.in, Thehealthsite.com, Prepsure.com, Careerfundas.com, Travel.india.com and Video.india.com.

Penske owns 44% stake in India Webportal through MMC Investments Holding Company. The balance 5% stake is held by Ashok Kurien, a non-executive director at ZEEL.

In FY17, India Webportal reported a loss of Rs 13.8 crore compared to a profit of Rs 2.6 crore a year ago. Total income stood at Rs 64.7 crore, down from Rs 71.7 crore in FY16.

ZEEL said that India Webportal, which acts as its digital arm, has the potential to consolidate and scale up the digital business.

ZEEL has a larger ambition of growing its digital business big. The company has digital properties that include subscription service dittoTV and advertising-led video-on-demand (VoD) platform OZEE. The Zee Group also has news websites such as zeenews.com and dnaindia.com.

As reported first by TelevisionPost.com, ZEE incorporated a global digital outfit named Z5X, which is to become the hub of the company’s digital properties. Chamli Tennakoon has been appointed chief executive officer of the new organisation, in addition to his existing role of chief digital officer, Essel Group. Among many other changes, dittoTV business head Archana Anand has been made digital head of Z5X (India).

ZEEL is on an acquisition spree. After snapping up the TV broadcasting business of Anil Ambani, ZEEL is expanding its digital business.

Zee group has also made acquisitions in its other company, Zee Media Corporation Ltd. The radio business of Ambani was acquired. Besides, in February 2016, ZMCL acquired an 80% stake in two India Today Group companies, Today Merchandise and Today Retail Network, which run an e-commerce portal Bagittoday.com and plan to launch a television shopping channel.