While making the announcement on November 13, Subhash Chandra, chairman of Zee Telefilms said: "The acquisition is an important step from Zee towards consolidation in the media industry. The acquisition of a stake in Ten Sports not only gives us a strong foothold in the arena of sports broadcasting across Asia but also strengthens our operations in the Middle East."
Zee Telefilms has called the purchase a ôgreat strategic moveö and said that the rights owned by Ten Sports combined with the rights Zee enjoys creates ôthe single largest repertoire of cricket programmingö. Cricket is a passion in India and commerce has been known to come to a standstill the day key matches are played. The company also alluded to the fact that consolidation of the number of sports broadcasters in India could lead to a favourable price correction while bidding for telecast rights.
Zee Telefilms is IndiaÆs largest vertically integrated media and entertainment company. It is also IndiaÆs largest cable distributor through its wholly owned subsidiary Siticable. The company is aggressively in investment mode. Zee Telefilms declared encouraging half-year results recently showing revenue growth of 38%, driven by an increase in advertising revenues. Zee Sports, the sports channel in the Zee portfolio, which was launched about two years ago, accounted for a significant portion of the increase in advertising revenues. Other channels in the Zee portfolio include Zee TV, Zee Cinema, Zee News, Zee Music and a number of regional language channels.
Ten Sports was launched in April 2002 and is owned by UAE-based conglomerate Bukhatir Investments. The company also does television production and provides broadcasting solutions. It is estimated to have the highest viewership among sports channels in India, attributable in large part to the rights it owns to leading cricket properties such as the Pakistan Cricket Board and West Indies Cricket Board. The channel is available in 50 million cable/satellite households worldwide. Ten Sports is headquartered in DubaiÆs Media City and has three separate customised beams in the Middle East/Europe/the Far East, India/Sri Lanka and Pakistan/Bangladesh.
On various parameters such as advertising expenditure to GDP and percentage of television ad-spend compared to total ad-spend India lags both developed economies as well as more comparable emerging markets such as Brazil and China. This has led to widespread bullishness about the growth potential of television in the country. A private equity investor termed the deal ôa great move for Zeeö. Zee shareholders seemed to share the optimism and reacted positively to the news. The share gained 4.5% to touch a new high of Rs345.50 ($7.75) before profit taking. It closed up 3.3%.