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After Odia, ZEEL evaluates Bhojpuri and Malayalam channels
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Breaking News :  After Odia, ZEEL evaluates Bhojpuri and Malayalam channels
After Odia, ZEEL evaluates Bhojpuri and Malayalam channels

MUMBAI: Subhash Chandra-promoted Zee Entertainment Enterprises Ltd (ZEEL) is on an expansion spree. After acquiring leading Odia general entertainment channel Sarthak TV, the company is evaluating entry into the Malayalam and Bhojpuri markets.

ZEEL is studying the Bhojpuri market. Media observers feel that there is space for a new entrant even through the acquisition route, particularly after popular GEC Mahuaa TV ran into deep financial trouble.

“In the cow belt, we are still studying that market, especially on the Bhojpuri side, but we have not taken any decision yet on that,” ZEEL MD and CEO Punit Goenka told media analysts.

ZEEL is looking to stabilise the Tamil channel, after which it will explore a Malayalam GEC. That is the last southern-language market left for ZEEL to penetrate.

“Once our Tamil strategy stabilises and turns the corner, we will start exploring opportunities in Kerala,” Goenka told analysts.

The expansion into the regional-language markets will mean that ZEEL will continue to drive revenue growth from new businesses.

Strong organic revenue growth is already coming from some of the popular existing entertainment channels.

ZEEL runs a clutch of regional entertainment channels, including market leading Zee Marathi and Zee Talkies (Marathi), Zee Bangla (strong No. 2 in West Bengal), Zee Telugu (No. 1 in Q1 FY16), Zee Kannada (No. 2 in Karnataka) and Zee Tamizh.

Except for the Tamil channel, all ZEEL regional channels are in the top three spots and are profitable.

ZEEL has Rs 1,780 crore (Rs 17.80 billion) in cash, more than sufficient to fund any regional expansion plan. But Bhojpuri and Malayalam offer different sets of opportunities and challenges.

Bhojpuri market
The Bhojpuri market is small but growing and there could be acquisition opportunities. The weakening of Mahuaa TV also means that there is space for ZEEL to launch and grow a channel.

After performing strongly, Mahuaa TV is in a financial mess and the promoters are one of the biggest bank loan defaulters in the country. The Adhikari Brothers operate Dangal while Big Magic Ganga has some Bhojpuri shows.

Malayalam market

Media observers believe that in a market like Kerala, it is not easy to launch a channel as the space is already saturated. Therefore, the best course of action for ZEEL could be to acquire.

Though Kerala is a small state, it saw the proliferation of satellite television early on. Apart from Prasar Bharati’s DD Malayalam, there are 13 general entertainment channels, two movie channels, two music channels, three youth channels, one kids channel, one travel channel and seven news channels, dedicatedly serving the Malayali audience.

The Malayalam entertainment space is dominated by Star India’s Asianet and Asianet Plus. Then there are Sun TV Network’s Surya TV, Malayalam Communications’ Kairali, Amrita TV, Mazhavil Manorama, JaiHind, Darshana TV, Kerala Vision and Janam TV.

“In Kerala, Asianet is too strong a player with a very high brand recall. Surya TV is also a very strong channel. If ZEEL wants to enter the market, it will have to acquire a channel, like it did in Odisha,” a media observer commented.

Odia strategy

ZEEL has acquired Sarthak TV, the leading Odia GEC with over 25 per cent viewership share, for a total consideration of Rs 115 crore (Rs 1.15 billion). Out of this, Rs 15 crore (Rs 150 million) is linked to the performance of the channel and is payable over FY17 and FY18.

Sarthak is a profitable channel and acquisition seemed a good option to get into that market.

While the size of the Odisha market is Rs 100–110 crore (Rs 1–1.1 billion) on the advertising side, it is growing very fast and thus the acquisition has become an important addition to ZEEL’s regional portfolio.
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