Subhash Chandra, the chairman of Essel Group and one of the pioneers of satellite broadcast in the country will be divesting a chunk of his stake in Zee Entertainment Enterprises Limited (ZEEL), India’s first home-grown private broadcast network. The Essel Group, which holds 41.6 per cent stake in the media and entertainment company, is looking to divest up to 50 per cent of its promoter share in the entertainment firm. At today's value, the promoter's 41.6 per cent stake is worth Rs 175 billion. The announcement came after a strategic review meeting with Chandra and family, along with their advisors over the Diwali weekend.
In a statement released to the stock exchange, the promoters said, “It has been decided to undertake a strategic review of Essel's shareholding in ZEEL with a view to maximising value for the business. The proposed transaction to divest up to 50 per cent of Essel’s holding to such a partner, is expected to address the Essel Group's capital allocation priorities and will allow ZEEL shareholders to capture the full value of India’s largest entertainment broadcaster with an ever-strengthening bouquet.”
While its experience of over two decades in the Indian media and entertainment landscape affords ZEEL a leadership position in the country, the promoters feel there is scope to expand this beyond India. “There is recognition that a right global strategic partner will help in transforming ZEEL further and maximise long-term value. It will transform it into a global media-tech player with a unique offering of content to the mainstream audiences in 170 plus countries putting it into a king position globally,” according to a statement by Essel.
Essel has appointed Goldman Sachs Securities (India) Ltd as their investment banker and the US and European-based LionTree as an international strategic advisor for this exercise. Essel expects the outcome of the strategic review to be concluded by April 2019.
The review undertaken over the weekend noted that with the current 1.3 billion viewers and close to 50 million digital viewers growing at a fast pace, ZEEL is well placed to benefit from current market trends due to its strong brand and bouquet of domestic and international channels. Adding to that strength, ZEE5 will further enable the company to leverage the benefits of changing video consumption trends, contributing significantly over the coming years.
The management of ZEEL under Punit Goenka and Amit Goenka has been well appreciated by all stakeholders and reflected in the performance of the company. Speaking on where the business stands today, Jawahar Goel said, "Punit and Amit have made the right sustainable investments for the future and the business is growing ahead on all fronts in a focused and disciplined way.”
ZEEL reported revenues of Rs 16.77 billion for the quarter ended September 2018, while PAT stood at Rs 3.77 billion.