Acquisition of ETC Networks

by ZEE Telefilms limited

By Aashish Rana
 Zee Telefilms Ltd (ZTL) is to acquire about 57 per cent
equity stake in ETC Networks Ltd from its promoters
and through preferential allotment for about Rs 25
crore even as the entertainment major’s board meets
tomorrow to consider its corporate restructuring plans.
 ZTL plans to acquire 48.38 per cent equity (56,60,795
shares) of ETC Networks from its promoters at Rs
17.84 crore while an additional stake worth Rs 7 crore
would come through a preferential allotment making
Zee a majority stakeholder, ZTL group broadcasting
Chief Executive Officer Sandeep Goyal told
newspersons here on february 2002.
Rational for the Merger
 For Zee Telefilms the reason for the merger were:
1. Obtaining market leadership in music and Punjabi segment by
increasing the market share from 11 per cent to 45 per cent in
music segment and from 24 per cent to 58 per cent in Punjabi
segment.
2. Accessing ETC`s library of film rights. This helps in operating
its zee cinema movie channel.
3. Generating additional revenue by increasing its bouquet of
channels and making them as paid channels.
 For ETC Networls the reason for the merger were:

1. Reaching the global platform for carrying the exclusive live

broadcast of gurbani from golden temple, amritsar.
2. Reducing and rationalising overhead expenses.
3. Strengthening negotiation power in music and Punjabi segment.
The Take over deal and its
motivation:
 Zee acquiered 48.38 per cent of the share capital of etc at a
consideration of Rs. 17.84 crore and thereby transfering the
56,60,795 equity shares of Rs 10 each. The financing was
done through cash.
 The motivation for acquisition were:
1. synergies: the acquisition were excepted to improve the
content offering which would improve viewership and
subscriber fess. Zee wanted to strengthen its sales
marketing of punjabi and music channels and at the same
time etc to get global platform.
2. Diversification: it is a related vertical and horizontal
diversification since zee cinema would benefit from ETC`s
film library, and both the companies operated in the same
segment.
Post takeover impact
 Benefits to ETC
1. Leveraging on the common sales marketing opportunities both
in India and overseas.
2. Instead of being a standalone broadcaster, ETC has become a
part of zee Telefilms.
3. Common appartus for negotiations with music and movie
industry.
4. Zee provision of global platform by zee to ETC for carrying the
exclusive live broadcast of gurbani from golden temple,
Amritsar through its overseas channels.
5. Extended help from zee to ETC for publishing the gurbani in
both audio and video media.
6. Improved operational performance through better network
synergies and reduction in overheads.
TO BE CONTINUED…
 Benefits to zee:
1. Undisputed market leadership in music and
Punjabi segment.
2. Access to ETC`s library of film`s rights.
3. Additional pay revenues as both the
channels are made pay channels, being part
of the zee turner bouquet of 17 channels.
4. Synergies between zee records and ETC
music, including exclusive rights to publish
audio and DVDs of Golden Temple Gurbani.