M&A Critique
Essel Publishers Merge Zee Media

Essel Publishers Merge With Zee Media

Zee Media Corporation Ltd is one of the India’s foremost multi-media companies with a strong presence in the national and regional news genre. The company was incorporated as Zee Sports Limited on August 27; 1999 and its name changed to Zee News Limited on May 27, 2004. ZNL got de-merged from Zee Telefilms Limited on March 31, 2006, as per the scheme of arrangement approved by the Hon. Bombay High Court on 17th November 2006. The company became a listed entity on January 10, 2007.The name of the company was further changed to Zee Media Corporation Limited with effect from 6th of July 2013.

Zee Media Corporation Ltd (ZMCL) touches the lives of millions of Indians through a clutch of national and regional news channels. The specific channels operated by Zee Media Corporation Ltd are Zee News, Zee Business, Zee Punjab Haryana Himachal, Zee Sangam, Zee 24 Gantalu, Zee Madhya Pradesh-Chhattisgarh, Zee 24 Taas, the first 24-hour Marathi news channel. 24 Ghanta, a 24 hour Bangla news channel is operated by a subsidiary company known as Zee Akaash News Private Limited.

Zee News, which is the flagship channel of the company, has the ‘Soch Badlo Desh Badlo’ tagline which shows the focus on hardcore and serious news. The channel’s programs have won several prestigious national and international awards. Zee Media Corporation Ltd also supplies content to the international broadcasting business of Zee in the US, Europe, Africa, Middle East and Asia Pacific.

The combination of Diligent Media Corporation with Zee Media Corporation Limited brings lot of value to all stakeholders


Combination of News Publication Business of Diligent Media Corporation Limited (DMCL) with the News Broadcasting Business of Zee Media Corporation Limited (ZMCL)

  I. Diligent Media Corporation Limited (DMCL) becomes WoS of MIPL (one of Essel promoter group companies)

DMCL was formed as joint venture between Dainik Bhaskar Group and Essel Group. At the time of DNA’s launch in 2005, Bhaskar Group had both management and editorial control of DNA. But in 2009, Subhash Chandra, Chairman, Essel Group took charge of DNA’s operations. Share buyout by Essel group (i.e. through Tapaswi Mercantile Private Limited) from Dainik Bhaskar group (i.e. Bhaskar Multinet Limited, Bhaskar Infrastructure Limited and R C Agarwal (HUF) in F.Y. 2012-13. At what value it has been acquired is not disclosed. Later on, MIPL has infused fund of Rs. 325.30 crore as share application money which is going to be converted into Equity Share Capital into DCML

II.   Slump sale of Printing Division of DMCL to Pre-media Services Private Limited

On 1st March 2013, the printing Division was sold to Pre-Media Services private limited at Rs. 356.06 Crore.

III. Mediavest India Private limited becomes WoS of EPPL

On 1st Oct 2010, it became wholly owned subsidiary of 25FPS Media Private limited (i.e. promoters of ZMCL). On 18th July 2013 with the transfer of share by 25FPS Media private Limited to EPPL, MIPL became WoS of EPPL. At what price this has been sold/purchased is not disclosed.  

IV. Incorporation of EEPL and Reclassification (i.e. consolidation of equity share)& increment of share capital of EPPL:

Agamesh Properties Private limited (EPPL) incorporated on 3rd July 2012 with paid and authorized capital of Rs. 1,00,000/- compromising of 10,000 equity share of Rs., 10 each. Prime Publishing Private Limited was the holding company at the time of the formation of EPPL.

On July 18, 2013, EPPL had increased and reclassified its then existing Authorised Share Capital from Rs. 1,00,000 to Rs. 70,00,00,000 (Rupees Seventy Crores only) comprising of 70,00,00,000 (Seventy Crores) Equity shares of Re. 1 (Rupee one only) each. Subsequently, the Paid-up Share Capital of Rs. 1,00,000 (Rupees One Lac) comprising of 1,00,000 (One Lac) Equity Shares of Re. 1 (Rupee One only) each, stood increased to Rs. 67,31,00,000 (Rupees Sixty Seven Crores Thirty One Lacs only) comprising of 67,31,00,000 (Sixty Seven Crores Thirty One Lacs) Equity Shares of Re. 1 (Rupee One only) each, by issuance and allotment of 67,30,00,000 (Sixty Seven Crores Thirty Lacs only) Equity Shares of Re. 1 (Rupee One only) each on July 22, 2013. This investment by Arm infra & utilities Limited (one of the Essel group companies) is after the acquisition of 100% share of MIPL by EPPL.

Current Shareholding of EPPL

Sr. No. Name of the shareholder No. of share Shareholding
Arm Infra & Utilities Limited (Investment on 22nd July 2013) 67,30,00,000 99.985%
Prime Publishing Private Limited

(At the time of formation 3Rd July 2012)

1,00,000 00.015%
Total 67,31,00,000 100.000%

V.  Investment by EPPL into share of Pre-Media Service Private Limited  (WoS of EPPL):

The date of investment is not clear but it is after the 30.06.2013, as the financial available as on this date it is not showing as Subsidiary of EPPL. And the valuation report issued by Walker Chandiok & Co has not considered this investment in the valuation of EPPL as 30.6.2013. At what value the share has been acquired is not disclosed.

VI.  Merger of EPPL into ZMCL (Final Deal):

       a.  Appointed Date :

The Appointed date for the proposed Scheme of Amalgamation shall be Effective Date of the Scheme i.e. last of the date of filing of Order of Hon’ble Bombay High Court approving the Scheme with the Registrar of Companies by the ZMCL and EPPL

  1. Swap Ratio:

Issuance of 2 fully paid up Equity Share of Rs. 1 each of ZMCL for every 11 Equity Shares of Rs. 1 each held in EPPL.

  1. Valuation of EPPL as per Walker Chandiok & Co.

           DMCL    : Rs. 216 crore (i.e. INR 2159.38 million) based on the weight of 90% to Market Multiple methods &  10% to Adjusted Net Asset.

          MIPL without investment in DMCL : Negative Rs.28 crore (i.e. INR 284.50 million ) based on adjusted net asset value

  1. What is worth of acquisition/Merger?

         a. What DMCL has:

  • DMCL publishes, distributes and operates the leading newspaper “Daily News & Analysis – DNA” and in addition, is vested with a broadcasting license for a nonnews and current affairs channel.

(According to a report published by the Information & Broadcasting Ministry (I&B Ministry), as of 31 January, 2014, the number of permitted private satellite TV channels in the country stands at 786; out of which 389 are news and current affairs channels, while the remaining 397 are non-news and non-current affairs ones. The number of licensed channels has more than doubled from 300 in 2006 to over 700. This increase in competitive intensity results in channels having to continuously adapt their businesses to stay ahead of their competitors)

       This might be also to keep Zee media Competitive and expand its core activities.

  • DMCL has over the past few years of its operations expanded its reporters and photographers strength, depth and variety of genre of news content and overall media presence through its  increasing clientele
  • Expansion of publishing from regional to the national level with the addition of fixed Asset of Rs. 352.57 crore i.e. money received from the slump sale of Printing Division. And within a short span of seven years, DNA has fast entrenched itself into the lives of the young and dynamic readers in India’s financial capital of Mumbai, in the IT Capital Bangalore, and other key cities such as Pune, Ahmedabad, Jaipur and now Indore.  
  • The merger if gone through will lead to a lot of synergies as essentially there are a lot of areas that can be merged on a single platform
  • It will help cater to consumers who follow news on different platforms, regions, and languages
  • Future Stories will be shared across the two mediums thus allowing English, Hindi, and other regional languages to benefit from each other
  • Media will be in a position to leverage the combined network of resources, working in an integrated newsroom through multiple platforms as well as providing a bouquet of services to advertisers which would strengthen its market reach. Integration of networks is a major step toward reducing costs and increasing revenues, and thereby bolstering margins.
  • Offering content to the viewers and readers of both the mediums (viz. Electronic and print) will be easy and cost effective
  • It will enable the Zee group to leverage their resources more judiciously and be cost effective, there would be lower marketing spends
  • Sharing of news rent, reporters, photographers, OB vans etc would be possible leading to better deployment of resources and avoiding duplication of the same.
  • Cross selling of the news, content, products and joint promotion of events of the group would also be possible to the consumers and advertisers.
  • A big opportunity for Zee media in the space for English language dailies
  • Both the businesses have individual strengths that can be exploited.

—– Zee News is one of the leading Hindi news channels with strong viewership across states of Chhattisgarh, Madhya Pradesh, UP/Uttarakhand, Bengali, Telugu, Marathi besides a business channel in Hindi.

—– On the other hand, DNA with six editions has a cumulative daily readership of over a million. Over the past few years of its operations, the newspaper has expanded its reporters and photographers strength, depth and variety of genre of news content and overall media presence through its increasing clientele.

The merger will support the Zee’s news business to emerge as a powerhouse in its core areas of operations. It will give the merged entity a higher bargaining power in an industry characterized by fierce competition. The cost savings and synergies will result in higher earnings for the shareholders and stakeholders.

  • The network is also in talks to buy 51 per cent stake in English news channel NewsX, jointly promoted by Nai Dunia owner Vinay Chhajlani and former Business World editor Jehangir Pocha. If the deal goes through, it will mark its entry into the competitive general English news space

Pre & Post shareholding of ZMCL

With the amalgamation of EPPL into ZMCL, the promoter’s stake in totally will increase to 69.11% (i.e. 25FPS Media Private Limited stake 53.54% drop to 35.31% and Arm Infra & Utilities Limited stake will be 33.79%)


As the scheme of amalgamation of EPPL with ZMCL has been approved by the high court and the effective date being the appointed date of the merger the benefit of synergies as discussed above will result in the growth of ZMCL & its market value in the coming year.


M & A Critique