Zee Telefilms acquires 50% stake in Ten Sports

Zee Telefilms Ltd and Taj TV Ltd on November 13, 2006 have announced that in a strategic move the Company has agreed to acquire a 50% stake in the Dubai based sports channel, Ten Sports. The investment is based on an enterprise value of US$ 114 million (approx. Rs 513 crores).

This is a great strategic move for the Company that reinstates the Company's seriousness and belief in the genre of sports broadcasting. Ten Sports is the leading sports channel in India with the highest viewership amongst sports channels. Ten Sports has rights to leading cricket properties like Pakistan Cricket Board, Sri Lanka Cricket Board and the West Indies Cricket Board. These rights combined with the BCCI neutral venue rights that Zee Sports has, creates the single largest repertoire of cricket programming. Among the other sports, Ten Sports also has rights to the UEFA Champions League, WWE, US Open, Hockey World Cup, which rate amongst the most popular programs in India. Zee Sports also has the rights to Indian football, Davis Cup, WTA, Italian Series A. Both the sports channels will be able to leverage these properties to its maximum potential across both the platforms.

Ten Sports, which is headquartered out of its state of the art office complex in Dubai Media City, also operates separate beams in the Middle East, Pakistan, Sri Lanka, Bangladesh and Hong Kong. This combined with the Indian presence of Zee Sports, makes the combination a true pan-Asian player in the arena of sports broadcasting.

On the acquisition, Mr Subhash Chandra, Chairman, of the Company said "This acquisition is an important step from Zee towards consolidation in the media industry. We are confident that this will add significant value for the shareholders of Zee. The acquisition of a stake in Ten Sports not only gives us a strong foothold in the arena of sports broadcasting across Asia but also strengthens our operations in the Middle East. I have known Mr Abdul Rahman Bukhatir for sometime now and have the greatest respect for him as a businessman and his leadership as one of the most successful conglomerates in the Middle East and more particularly the achievements that he has had in the areas of manufacturing, retail, construction, and especially the way he has popularized cricket in the Middle East. I am certain that our joint partnership will result in a mutually beneficial relationship."

Zee Sports and Ten Sports will be able to draw significant amount of synergies from each other in operating in the Asian market place. Moreover, this move would consolidate the number of sports broadcasters in India, thereby bringing about a price correction in the burgeoning rights fees for various sports properties. Mr Himanshu Mody, Business Head, Zee Sports said "The addition of Ten Sports gives us a significant strength enabling further effective exploitation of all our sports properties. The operational synergies between Zee Sports and Ten Sports would be tremendous and we should be able to run the two channels at much better economies of scale."

Following this move the Taj TV financial statements shall be consolidated on a line by line basis in the Company's books. Taj TV’s average annual revenues for the next 3 financial years will stand at approx. US$ 50 million, whist the average EBITDA for the next three financial years will be approx. US$ 14 million.

Source : Equity Bulls

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