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Zee Entertainment looking to sell 20-25% stake, 20% in ZEE5: report

Zee Entertainment Enterprises (ZEEL) is looking to sell a 20-25% stake to a strategic partner, reports Business Standard. It will also look at hiving off a 20% stake in ZEE5, the streaming platform, according to BS’ sources. According to the report, the company is in talks with 3 ‘prospective foreign strategic investment entities.’

In November, Essel Group said that it would divest upto 50% of its 41.6% stake in Zee Entertainment Enterprises Ltd (ZEEL) to a strategic partner to address its “capital allocation priorities.” In light of the group chairman Subhash Chandra and his family reviewing technology advancements like AI, IoT, AR, VR and the convergence of telecom and media, it had decided to divest from ZEEL.

ZEEL CEO and MD Punit Goenka, who is also Chandra’s son, reportedly told the Times of India that sale process was triggered after a “global media giant” made an offer to buy into ZEEL. According to the publication, the ZEEL had attempted to find a strategic partner for ZEE5, “but the potential investors sought covenants with the parent.”

Late last month, Zee’s stock crashed 33.4% on the BSE due to a news report claiming that Essel Group could be a part of a Serious Fraud Investigation Office probe pertaining to deposits of Rs 3,000 crore during demonetisation. Chandra said that Essel had solidified an agreement with lenders where it would pledge the group shares. But a week after this announcement, nothing was signed off by lenders, rendering the announcement false, according to this NDTV report. Over this weekend, Catalyst Trusteeship sold 74 lakh of its shares at Rs 361.42 per share.

Zee financials

ZEEL reported consolidated revenues of Rs 2167 crore for the quarter ended 31 December 2018, up 18% from the same quarter last year. The company said that this growth was driven by ‘strong performance of our broadcast business.’ EBITDA stood at Rs 754 crore, reporting an increase of 27% YoY and Profit after Tax (PAT) stood at Rs 562 crore in the quarter ending December 31, 2018 (Q3FY19).

  • Advertising revenue: Rs 1463 crore, an increase of 22% YoY
  • Subscription revenue: Rs 619 crore, an increase of 23% YoY

Zee Entertainment’s OTT service ZEE5 saw 56.3 million monthly active users in December, which is an increase of 36% over the last quarter. This does not include users from telecom partnerships. ZEE5 claims to have 1 lakh hours of content and 80 live TV channels streaming. The platform is likely to enter into partnerships with more telecom operators and players, coupled with innovation in pricing, it said in a statement. ZEE5 is also available on Xiaomi, Samsung and LG smart TVs.

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