The Board of Directors of Zee Telefilms has approved the demerger of the direct consumer services business undertaking (including the business carried out through subsidiaries) of the company into ASC Enterprises Ltd (ASC). The company’s other subsidiaries – Siti Cable Network Ltd (Siti Cable) and New Era Entertainment Network Ltd (NEENL) – will be subsequently merged into ASC.
“There won’t be any issue of shares consequent to the merger of Siti Cable and NEENL into ASC as pursuant to the demerger of the direct consumer services business undertaking of the company into ASC, both Siti Cable and NEENL would become the wholly owned subsidiaries of ASC,” the company said in a statement.
The company also declared its Q4 results ended March 31, 2006, in which it posted a net loss of Rs 13.25 crore, whereas in the corresponding quarter of FY05 Zee had reported a net profit of Rs 37.04 crore. Total income in Q4 FY06 stood at Rs 266.13 crore as compared to Rs 174.9 crore in Q4 FY05.
The company has posted a net profit of Rs 74 crore for the year ended March 31, 2006, whereas its net profit for the year ended March 31, 2005 stood at Rs 162.26 crore. Zee’s total income for FY 2005-06 stood at Rs 884.49 crore as compared to Rs 693.07 crore for the previous year.
The business of Zee Sports, which began on June 8, 2005 as a unit of Zee Sports Ltd (ZSL), has been reorganised in Zee Telefilms during the current quarter, while content gathering and space selling activity remains with ZSL through an agency arrangement. “Hence, the standalone results of the company for the current quarter and the year are not comparable,” the company said in its statement.
Commenting on the results, Zee Chairman, Subhash Chandra, said, “We are pleased to report the continuing uptrend in advertising revenues and the strong recovery in our market position. You are aware of the hike in advertisement rates announced by Zee Network, which we are confident would start reflecting in FY07 revenues.”
“The Board has also given approval for the hiving off of Zee’s direct consumer business. All DishTV operations would now be under a single corporate entity, bringing strategic clarity to this high growth business. This shall complete the restructuring agenda we had set for ourselves to create four focused, pure play, listed companies ready to exploit the vast emerging opportunities in each line of business. Subject to necessary approvals, this would result in streamlined operations in each area to build long-term shareholder value. It would also clear the ground for acquisitions and strategic or financial partners in the de-merged businesses, apart from unlocking shareholder value,” Chandra added.
Zee CEO, Pradeep Guha, said, “While general entertainment as a genre has posted a 5 per cent decline in time spent, Zee TV has increased its viewership share from 16 per cent to 22 per cent along with a significant growth in time spent. Even within prime time, Zee TV is the only channel to have grown – by 21 per cent – while its main competitors have dipped between 7 per cent and 12 per cent. Zee TV now conclusively occupies the No. 2 position in the pecking order of general entertainment channels. With an average of 180 GRPs, we are 30 per cent higher than the No. 3 general entertainment channel, which continues to be behind Zee Cinema as well.”
“The cinema space has shown a decline except for Zee Cinema, which has grown 7 per cent, and with a channel share of 37 per cent, it is undisputed as the No. 1 movie channel. Recently we won the BCCI Cricket rights for the one-day internationals to be held in non-ICC countries. This further strengthens the long term business prospects of our company,” Guha added.