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Zee to merge businesses of digital subsidiaries

Zee is merging its digital media and entertainment business undertakings of Zee Digital Convergence Ltd, including the Ditto TV and Ozee businesses, vesting it with the parent company ZEEL. In addition to this, it is emerging the online media business of India Webportal Private Ltd (which ran India.com and its affiliated websites) vesting that with ZEEL as well. It seems that instead of the companies being merged into the parent entity, the business undertakings are being transferred.

According to the filing:

  1. Zee Digital Convergence Ltd reported:
    • Turnover of Rs 18.89 crores for FY17
    • Ozee and DittoTV businesses accounted for Rs 16.58 crores for FY17.
    • a Net worth of Rs -33.17 crores.
  2. India Webportal reported:
    • Revenues of Rs 62.24 crores (of which the online media business accounted for Rs 62.23 crores)
    • A net worth of Rs 27.07 crores.

The rationale for this shift, according to the filing:
– Consolidation of digital businesses done through various subsidiaries under ZEEL “for deriving business synergies”.
– Reduction of inter-company transactions and balances
– Elimination of duplication in costs of administration and overheads costs reduction.

This is not new

This swapping of businesses between entities owned by listed companies is common, and we’ve seen media companies switch businesses across companies frequently in the past. We’ve referred to these processes as ‘musical chairs’ for businesses, largely driven by changing how accounting happens. Two other examples:

1. Network18:

  • In 2010, the TV18 group separated its businesses out into two entities: one which had only the “mature” TV businesses, under TV18, and others which had all the other businesses, including investments, under Network18. More on that restructuring here.

2. HT Media:

  • Separating out the content business: While Zee is transferring the business of digital subsidiaries into its core business, in 2015, HT Media began the process of transferring out the digital content business: it set up HT Digital Streams Limited, into which it transferred its “multi media content management undertaking”.HT had also set up a company called Firefly eVentures (in the mid-2000’s), which started Shine.com, bought Desimartini.com*, before Shine was shifted into HT Media Ltd (the process began in 2012), to offset costs from profits that HT Media was making in its print business. Two businesses then remained with Firefly e-Ventures: DesiMartini.com, which has become a movie reviews site, and HTCampus, an education focused portal. In 2015, it transferred Desimartini.com to TopMovies Entertainment Limited.

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