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ZMCL gets SEBI nod for demerger of print media biz, listing on way

MUMBAI: Subhash Chandra’s print media business, which includes English daily DNA, is on its way to get demerged from Zee Media Corporation Ltd (ZMCL) to be listed on the bourses.

Market regulator Securities and Exchange Board of India ( SEBI) has given its approval for demerger of ZMCL’s print media business into Diligent Media Corporation Ltd (DMCL). The merger of Mediavest India Pvt Ltd and Pri-Media Services Pvt Ltd into DMCL has also got SEBI’s nod.

Besides, the market regulator has cleared the merger of Maurya TV Pvt Ltd with ZMCL.

SEBI and the stock exchanges have approved these measures by issuing observation letters dated 16 January.

Subsequently, ZMCL filed an application seeking appropriate directions from the National Company Law Tribunal, Mumbai Bench, in connection with the scheme of arrangement and amalgamation.

In October last year, ZMCL had got the board’s approval to consolidate its print media business under DMCL. The print business would be subsequently listed on the Bombay Stock Exchange and the National Stock Exchange.

ZMCL’s print business is spread across three companies—DMCL, Mediavest, which is a holding company of DMCL, and PriMedia, which is into printing newspapers, periodicals, financial statements, magazines, annual reports, books and others on job work basis.

Mediavest and PriMedia are proposed to be merged with DMCL to create a consolidated entity for the print business.

The print media business of ZMCL reported a turnover of Rs 108.36 crore (Rs 1.08 billion) in FY16. This constituted 19.96% of ZMCL’s total turnover in FY16.

In the first nine months of FY17, the print media business of ZMCL widened its EBITDA loss to Rs 18.85 crore from Rs 5.34 crore a year ago. Revenue dropped to Rs 75.46 crore from Rs 81.42 crore. Total expenses rose to Rs 94.31 crore from Rs 86.76 crore a year ago.

Segment Results - 9 Months

For the demerger of print media business, each shareholder of Zee Media will get one equity share of DMCL for every four equity shares held in Zee Media.

For the merger of Mediavest and PriMedia into DMCL, no shares will be issued since pursuant to the aforesaid demerger, they would become wholly owned subsidiaries of DMCL.

The decision to demerge DMCL has been undertaken to lend greater focus to the print business. The print and TV businesses have different regulatory and business challenges, thus requiring greater focus to manage the two.

Zee Media said that it would attract foreign investors up to 49% after carving out of the print media business, subject to necessary regulatory approvals. The foreign direct investment (FDI) limit in TV is 49% and it is 26% in print.

The demerger of the print business will result in significant deleveraging from Zee Media’s consolidated balance sheet. It will result in improved PBT at Zee Media consolidated level. Based on the financials for the six months ended 30 September, the proforma PBT (excluding exceptional items) of residual consolidated Zee Media will improve by approximately Rs 25 crore due to the aforesaid demerger.

Merger of Maurya TV into ZMCL

Maurya TV was acquired by ZMCL for Rs 7.79 crore in 2015. The merger of Maurya TV into ZMCL will lead to a reduction in administrative costs, thereby helping achieve better operational and management efficiency.

For the merger of Maurya TV into Zee Media, no shares will be issued to shareholders as Maurya is a wholly owned subsidiary of Zee Media.

The entire restructuring initiative is expected to be completed by Q2 FY17.

Meanwhile, the board of ZMCL approved the appointment of Jagdish Chandra as CEO of the company’s regional news channels. A former bureaucrat who took voluntary retirement from the Indian Administrative Services (IAS), he was responsible for driving regional news channels of ETV and establishing them as powerhouses.

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