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The Zee divestment plan will serve the long-term interest of its  minority stakeholders, says CEO Punit Goenka. Photo: Mint (Mint)
The Zee divestment plan will serve the long-term interest of its minority stakeholders, says CEO Punit Goenka. Photo: Mint (Mint)

Zee plans strategic divestment to fuel global ambitions

Essel Group sees divestment of 50% of its stake in Zee Entertainment as central to its plan to evolve into a global content technology company

New Delhi: Media and entertainment conglomerate Zee Entertainment Enterprises Ltd has decided to divest 50% of Essel Group’s shareholding in the company as it looks for a global strategic partner. The move would help it maximize long-term value and transform it into a global media-tech player with content offering for audiences in more than 170 countries.

Essel Group has decided to appoint Goldman Sachs Securities (India) Ltd as investment banker and Lion Tree as an international strategic adviser to manage the Zee divestment. It expects the outcome of the strategic review to be concluded by March or April 2019.

“While taking this decision, we were all already aware of our strong footing in the business. The company is doing exceptionally well as far as the broadcast network goes, and ZEE5 is also the second largest player in the market," said Zee Entertainment’s chief executive Punit Goenka.

“However, the only way to achieve our global ambitions is to partner with the right entity that can take us to the world and help us transform from a pure content company to a content technology company that can ensure we are able to compete in this rapidly evolving digital world.

“We also believe this move will serve the long-term interest of our minority stakeholders as our content and distribution capabilities only get enhanced in the time to come," he added.

The decision comes on the back of Zee’s strong bouquet of domestic and international channels that offer content in about 12 languages globally, its established revenue streams—both advertising and subscription—and the fact that its video-on-demand streaming platform ZEE5 will further enable the company to take advantage of changing video consumption trends.

Zee’s strong linear and digital distribution network already ensures its presence in the South Asian diaspora but the goal is global. In view of recent technological advances like artificial intelligence, Internet of Things, 3D printing, Augmented Reality and Virtual Reality, Zee recognizes that the lines between media, telecom, manufacturing and technology are blurring and that the company needs to evolve and stay ahead of the curve.

In July this year, Essel Corporate LLP acquired 15 million shares of Zee, its shareholding with respect to the total share capital of Zee going up from 1.49% to 3.05%.

Essel Group is a business conglomerate with presence across media and entertainment, packaging, real estate, infrastructure, education, finance, precious metals, technology and tourism. Its media interests include the Zee group of TV channels, and broadsheet Daily News and Analysis (DNA). Related businesses include direct-to-home television operator Dish TV, digital cable service provider Siti Cable and Zee Turner Ltd. The Subhash Chandra-led group continues to see India as a priority market and will invest in growth opportunities in the country.

The development comes at a time when Essel Group promoters are looking at selling their stake in other group businesses too.

In September, Mint reported that Essel Propack and was in stake sale talks with at least two foreign packaging companies, including Amcor Ltd and Huhtamaki Oyj. The promoter group, led by Chandra’s younger brother Ashok Goel, has mandated Morgan Stanley to manage the transaction.

In May, Mint reported that Tata Power Ltd and private equity firm Actis LLP were in separate talks to buy the solar power business of Essel Infraprojects Ltd. The company has 685 megawatts (MW) in solar power capacity.

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