labels: zee group
JV with Turner to help enhance Zeenews
Praveen Chandran
18 December 2001

Mumbai: The joint venture between Zee Telefilms (ZTL) and Turner International India (TII) is expected to bring new business synergies to ZTL, which is passing through a bad phase, say analysts tracking the media sector. The subscription base and the revenue of the media major might witness a substantial increase in the next fiscal.

With the broadcasters thrust on subscription revenues, this joint venture augurs well for ZTL, they add. ZTLs consolidated subscription revenue is likely to cross Rs 350 crore, higher by around 75 per cent over the previous years Rs 205.1 crore. In its consolidated performance in the second quarter, ZTLs revenue from subscription has already risen by 52 per cent to Rs 81.5 crore.

Last week ZTL and TII, a 100-per cent subsidiary of AOL Time Warner, had formed a new joint venture company called Zee Turner Pvt Ltd. ZTLs holding in this JV is 74 per cent, TII holds the balance 26 per cent. Subhabrata Majumder, an analyst with Motilal Oswal Securities, says the JV has come at a time when the bouquet concept of content delivery is picking up. Since subscription revenues are clearly emerging as revenue and earnings drivers for all major broadcasters, the main players are trying to enhance their bouquet offerings, both in terms of genre spread as well as the number of channels.

He says the bouquet offering would be enhanced to 18 channels from the current 15 - 14 channels of Zee and a third party channel, Nickelodeon, owned globally by Viacom. The move also adds the HBO channel to the bouquet, evidently the numero uno English movie channel in India. The JV is then a strong answer back to the intense competition offered by Star Movies.

It also brings along Cartoon Network, the leading childrens channel in India, which has a dedicated viewership with virtually no competition. Besides, CNN would offer global news content, while Zee News would focus on local news delivery from India. The JV would pool in the marketing expertise of both the parties and thereby enhance the understanding and competence, says an analyst.

Majumder says the JV will collect the DTO subscription revenues for the 18 channels and retain 10 per cent of the collection as commissions, which will take care of its overheads. It will pass on the rest to the respective channel broadcasters, ZTL and TII.

According to an analyst with SBI Caps, Zee, which has a strong presence in the north, west and central India, will be able to make inroads into south with this JV. This is mainly because Turner channels have a strong reach in south India.

A senior analyst with Kisan Ratilal Choksey Shares and Securities says: With a bouquet of 18 channels, Zee will be able to negotiate better with the operator. This is good development for ZTL in the medium and long term - it augurs well for the company.

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JV with Turner to help enhance Zee