Restructuring – Key to success :: IIPM Publication

Encouraged by the developments, Subhash Chandra has decided to undertake a restructuring exercise (subject to shareholder approval) to hive off Zee Telefilms into four separate entities to unlock hidden value and create strategic depth. Zee News and regional channels will form a separate company called Zee News Ltd. The cable business will be run by Siti-Cable Network Ltd. DTH and future digital operations will become Wire & Wireless (India) Ltd., and Zee Telefilms will remain the flagship business. Subhash Chandra stated while declaring results for the quarter ending March 2006, “We are confi dent it (hike in advertising rates announced by Zee) would start reflecting in FY2007 revenues.” For the financial year ending March 2006, Zee Telefilms Ltd. earned revenues of Rs.10.51 billion and operating profits of Rs.2.41 billion. Zee News Ltd. clocked revenues of Rs.2.01 billion with operating profits of Rs.257 million. The cable business, however, saw poor operating profits (Rs.17 million). DTH remains a money guzzler with operating loss of Rs.751 million. Since 2005, the value of the Zee scrip has more than doubled and was quoted at Rs.245 on July 11, 2006. Says a Merrill Lynch report, “Zee TV has finally overtaken Star Plus in the 9-10 pm band... Also Sony-Discovery alliance channels are now on-air on Zee’s DTH platform Dish TV, improving its content offering.”

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Source: (Business& Economy), IIPM; Editor: Arindam Chaudhuri