The long wait for Zee has finally ended. Readers will recall that Zee had acquired a 50% stake in TEN Sports for $57.15 million, in mid November 2005. However, TEN Sports was under a 3 year contract for distribution by the One Alliance platform. That term ended on 31st March 2008, and TEN Sports immediately shifted to the Zee Turner distribution platform.
ZEE TO BUY OUT TEN SPORTS
In 2005, Zee bought only a 50% stake in TEN Sports, owned by Mr Abdul Rahman Bukhatir's Taj Television Ltd, in an all-cash deal, at US $57.2 million. That deal pegged the (then) value of TEN Sports at US $ 114 Million. This was significantly below the US $ 140 million pegged by TEN Sports when it put itself up for sale. The key reason for the lower price was that TEN Sports had signed a 3 year distribution deal with One Alliance. As a result, the Distribution income, and ground presence could not be capitalised by any new buyer. One Alliance had struck the distribution deal at Rs 240 Crores (US $ 55 Million approx).
The 50% stake purchase was a prelude to a total buyout in 2009. This seems clear from the fact, that though Zee has bought exactly 50% stake (not a majority stake), the deal also provides Zee majority representation on the Board. The revised composition of Ten Sports' board of directors will see 4 directors from Zee and 3 from Ten Sports.
"We have taken a controlling stake but after 2009 we will have the option of buying additional equity," said Subhash Chandra, chairman, Zee Telefilms, was quoted by the press. The price of the balance 50% will be decided at that stage by the 2 companies and an independent valuer.
Zee Turner Will Pay TEN Sports
A Minimum Guarantee Of
Rs 320 Crores |
NEW DISTRIBUTION DEAL
Since Zee currently owns only 50% of TEN Sports, and has the option to pick up the balance stake only in 2009, it has to deal with TEN Sports as an independent company.
As a result, Zee Turner will pay TEN Sports Rs 3.2 billion as minimum guarantee. This is higher than Sony's payout of Rs 2.40 billion for the duration, 3 years ago.
SPORTS BUNDLE ON ZEE TURNER
Zee has its own sports channel - Zee Sports, also distributed on the Zee turner bouquet. As a logical extension, Zee -Turner has decided to create a new - 2 ports channel bundle within the Zee Turner bouquet, and offer both sports channels - Zee Sports + TEN Sports at a bundled monthly price of Rs 26.70 per subscriber.
Zee Sports + TEN Sports Are Offered As A Bundle At Rs 26.70 |
Zee-Turner Ltd, has projected its subscriber base to increase to over 5 million and the total business to grow by over 25% following the addition of TEN Sports. The sports channel has a wide variety of sports including 53 days of international cricket in 2008, WWE, football, and other sports.
TEN Sports joining the Zee-Turner bouquet in reality is just a part of TEN Sports' bigger transition - of being completely acquired by Zee in 2009. n
