After over two years in the sports broadcasting wilderness, Zee Telefilms (ZTL) has finally come of age with the acquisition of a 50 per cent stake in the Dubai-headquartered Ten Sports channel.
Having fixed an enterprise value of $114 million (Rs 513 crore), the equity stake in Taj TV—owners of Ten Sports—will cost Zee $57mn.
Himanshu Mody, Business Head of Zee's existing sports channel, said merging Zee Sports and Ten Sports in a single corporate entity like ESPN Star Sports in the future was a distinct possibility.
However, Chris McDonald, CEO of Taj Television clarified there would be no change in the current management team both in Dubai and India. There would, however, be an increasing shift of operations of the Ten Sports channel from Dubai to India.
Taj Television, owned by West Asian oil magnate Abdur Rehman Bukhatir, has been on the hunt for a strategic partner for over 2 years with Sony Entertainment Television (SET) being the frontrunner most of the time.
SET had even signed an MoU for taking a 50 per cent stake in Taj TV a few weeks ago at a valuation of $120mn, but the deal fell apart when working on the fine print of the conveyance documents.
Zee spokesperson Himanshu Mody conceded that Zee Telefilms too had been in talks with Taj TV, but no deal could be clinched as "Ten was demanding a $140mn valuation".
Sony was in the hunt till the very last, and had offered $90mn, industry sources said.
For Zee, that has been seeking a strong presence in the sports broadcasting space for the past few years, the Ten Sports acquisition comes as a shot in the arm. Its existing Zee Sports channel does not have any significant cricket or other international sports properties.
Ten Sports, on the other hand, has exclusive rights to international cricket played in Pakistan, Sri Lanka and the West Indies, as well as UEFA Champions League Football and the Hockey World Cup.
Besides making Zee a strong sports broadcaster, Mody stressed the partnership with Ten Sports would also give Zee an additional foothold in the West Asian market. "Ten Sports' distribution network in West Asia will help the penetration of Zee's other channels too."
Ten Sports' search for a strategic partner was necessitated both by increasing its investment in expensive sports properties as well as gaining a stronger distribution and production foothold in India, McDonald said. With a strong media business in India, Zee satisfied that criteria, he added.
"We will however continuing our distribution contract with Sony till March 2008," McDonald clarified.
A joint release said Taj TV's financial statements would consolidated on a line by line basis in Zee's books. Taj TV's average annul revenue for the next 3 financial years will stand at around $50mn, while the average annual EBITDA will be approximately $14mn.