Zee Tele buys 50% in Ten Sports for $57m
Zee Telefilms on Monday announced that it is buying 50% of the Dubai-based Taj Television, which runs Ten Sports channel, in an all-cash deal of $57.2m. The deal values Taj Television at $114m.
Informed sources pointed out that the deal is a prelude to a total buyout in the future. While both Zee Telefilms said that that Ten Sports would be running as a separate firm for some time, a source familiar to the development pointed out that, considering both parties have state-of-the-art production facilities, in India and Dubai respectively, one of the two will be made a centralised production facility that will be leveraged by both parties and the second production facility would be rented out so as to use it as a alternate revenue source.
The deal was closed on Monday morning after Zee’s board approval. An in-principle deal was struck on Saturday. Players who have been in talks at various stages to Taj TV include Sony, R-ADAG, Super Sports and ESPN-Star Sports.
Following the deal, Taj TV financial statements will be consolidated on a line-by-line basis in Zee’s books. Taj TV’s average annual revenues for the next three financial years will stand at approximately $50m, while the average EBITDA will be close to $14m.
Commenting on the deal, Himanshu Mody, business head of Zee Sports said, “The deal will help us draw operational synergies such as transponders, satellite capacity and programming that could be done for Ten Sports out of India at a far lesser cost.”
He added that content sharing synergies would also be available. This would mean that both channels could utilise the sporting properties simultaneously, in different languages catering to different audiences, apart from giving Zee access to close to 150 days of cricket over the next two to two-and-a-half years.
Set Max and Sab TV did the same with the recent Champions Trophy, with Max telecasting in English and Sab in Hindi. “Together, ratings (for Champions Trophy) were far higher than a single channel telecast,” added Mr Mody.
Earlier this month, Sony Entertainment Television (SET), which was also in advanced talks with Ten Sports, failed finalise the deal due to the valuation differences and the fact that Ten Sports owned limited rights that expires in ’08.
Sony already has a distribution deal with Ten Sports, inked in April ’05. While the current distribution platform is not likely to be altered, Ten Sports could migrate to the Zee-Turner platform once the distribution deal ends in ’08.
Ten Sports has signed cricket telecasting rights with Pakistan Cricket Board, Sri Lanka Cricket and the West Indies Cricket Board.
According to Zee, these rights, combined with the BCCI neutral venue rights that Zee Sports has, creates the single largest repertoire of cricket programming. Ten Sports also has rights to the UEFA Champions League, WWE, US Open and the Hockey World Cup.
Zee Sports, on the other hand has the rights to Indian football, Davis Cup, WTA and Italian Serie A. Both channels will be able to leverage these properties to its maximum potential across both the platforms.
Ten Sports, headquartered in Dubai, also operates separate beams in the Middle East, Pakistan, Sri Lanka, Bangladesh and Hong Kong.
Commenting on the acquisition, Subhash Chandra, chairman of Zee Tele said: “This acquisition is an important step from Zee towards consolidation in the media industry. We are confident that this will add significant value for the shareholders of Zee. 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. I have known Mr Abdul Rahman Bukhatir for sometime now and have the greatest respect for him as a businessman and his leadership as one of the most successful conglomerates in the Middle East and more particularly the achievements that he has had in the areas of manufacturing, retail, construction, and especially the way he has popularised cricket in the Middle East. I am certain that our joint partnership will result in a mutually beneficial relationship.”
Zee Sports and Ten Sports will be able to draw significant amount of synergies from each other in operating in the Asian market place. Moreover, this move would consolidate the number of sports broadcasters in India, thereby bringing about a price correction in the burgeoning rights fees for various sports properties. The addition of Ten Sports will enable Zee to significant impetus to further effective exploitation of all our sports properties. “The operational synergies between Zee Sports and Ten Sports would be tremendous and we should be able to run the two channels at much better economies of scale,” added Mr. Mody.
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