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Zee targets to become the largest integrated convergence companynews
Alok Agarwal
26 September 2000

Addressing the shareholders at the 18th annual general meetingsubhash_chandra of Zee Telefilms, Subhash Chandra, chairman, made his intentions clear. "It is my ambition to make Zee the world's largest integrated convergence company and to achieve this we are building our business through a combination of access and content," he announced to the large gathering of shareholders.

He said, "So much is happening in the convergence economy that internally we often speak and discuss amongst ourselves about the need to get into some areas while leaving the others. We feel there is a great necessity to get into convergence arena, in order to enhance shareholder value or we will be left behind if initiatives are not taken at this stage." He went on to stress that the company views itself at the forefront of convergence economy and because of its USP in using and exploiting relevant technology in an optimum manner, the company has got into Internet, cable, the HFC project, last mile connectivity, knowledge and other related areas.

According to Mr. Chandra the media business has come a long way from being a mere Rs. 2,000 crore industry in 1992 to about Rs. 15,000 crore now. His prognosis for the future – while the industry is likely to touch Rs. 45,000 crore by the end of year 2005, the ICE economy is likely to grow to a whopping Rs. 100,000 crore.

Mr. Chandra recounted the days when he ventured into the media business. He said the same banks and financial institutions, which were hesitant to lend him the first Rs. 3 lakh required for Zee Telefilms, are running behind him to fund the company's activities.

While reassuring the shareholders that their company was well poised to take advantage of the fruits of the ICE economy, he spoke on various subjects.

Shareholder Value.

On improving shareholder value Mr Chandra said, "The company has retained the services of AT Kearny to advise us on how to emerge as a highly focussed and efficient organization so as to enhance shareholder value. We are already half way through the exercise and in the next 6 to 8 weeks the entire process will be over."

New Initiatives.

On new channels Mr Chandra stated the following:

    • US film major, MGM, has taken a 30 per cent stake in our music channel, which will be relaunched in the middle of October.
    • The Alpha channels have shown a very encouraging response and have become the leaders in their respective regions.
    • Alpha Marathi has already broken even and has also surpassed Doordarshan in terms of viewership.
    • Advertisement revenues from these channels will exceed Rs 35 crore this year.
    • To cover our somewhat weak position in the south, the company has already entered into a strategic partnership with Asianet and has launched Asianet Kauvery in Karnataka.
    • In the third quarter we will be launching the Telegu and the Tamil channels.
    • The company will be launching its sports channel in the first quarter of 2001 for 24 hours viewing, although it ready for launch in December 2000 for 6 to 8 hours of viewing.
    • We will be soon launching a Zee learning channel which will cover course materials for higher studies including those for engineering, medicine, accountancy etc.
    • Group company, Zee Interactive Learning Systems Ltd., which is handling our foray into education, will have a technical collaboration with an Israeli company."

Digitalization --- a step towards cost cutting.

Mr Chandra said,"By the end of the current fiscal, channels like Zee Cinema and Zee Music will also go to the digital domain leading to substantial cost reduction."

Capital Expenditure.

Mr Chandra informed the shareholders that over the next 2 to 3 years Zee will not need more than Rs 700 to Rs 800 crore for investment in programming and this amount would be available to it through internal accruals. However for its HFC or hybrid fibre coaxial project it would have to go in for some extra funds. "For our HFC project, we may need to disinvest about 20 per cent or even less of our stake in Siticable. We have appointed AIG and SSKI to look out for a suitable investor and this process is likely to be over by the end of October."

2nd quarter and first half performance

Taking a dig at Star Plus channel Mr Chandra said,"Thanks to Star Plus and Mr Amitabh Bachhan, for the first time in six years, I have been able to raise Zee''s advertisement rates and contrary to what the print media will like everyone to believe, we have done very well in the second quarter and therefore the first half ending 30th September, 2000. Our revenues have grown almost 30 per cent to about Rs 450 crore (previous year Rs 346 crore), including an extraordinary income of about Rs 20 crore (interest and dividend). However, growth in profits has not been in the same league because of some extraordinary debits/expenses on new initiatives taken by us like those on Zee Interactive and Zeenext. The next quarters and the second half will be much better."

 International operations.

Mr Chandra said,"We are already covering about 75 per cent of the globe through our presence in Asia, Europe, USA, Africa, Australia, New Zealand, Canada and Caribbean. Our aim is to further strengthen our presence in various parts of the world."

"We are nimble footed" --- RK Singh.

Addressing concern raised by some shareholders over fall in TRP ratings of some of the Zee programs Mr RK Singh, CEO entertainment, said, "The success of a channel should not be measured by just one program (Referring to KBC on rival Star Plus). Our programs have been structured to suit the needs of a much larger audience. However we are nimble footed and have already taken action to counter the threat from KBC. Shareholders must remember that their well being draws our greatest attention at all times. We have been burning midnight oil in order to show very good programs to our viewers. We want to show good programs. Our own game show, Sawaal Dus Crore Ka and other new programs will bring back TRP ratings and our growth will be very very robust in the third and the fourth quarters."

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Zee targets to become the largest integrated convergence company