Zee Entertainment: Announcement on sale of promoter stake soon

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Updated: July 24, 2019 7:04:20 AM

In an interview to a local publication in December, Goenka had said the company's objective is to enable people to consider Zee as a mainstream media company like a Disney or a Fox or NBC.

Earlier in the day, Zee reported a 62.6% year-on-year rise in consolidated net profit after tax to Rs 530.6 crore in the three months to June.

Zee Entertainment Enterprises on Tuesday said it is a ‘matter of days’ before the company makes an announcement on selling promoter stake. MD & CEO Punit Goenka said the firm has received a binding offer and it is likely to receive a second offer in the next few days.
“Once both the offers are on table, the family will evaluate and take a decision,’ Goenka said during the Q1FY20 earnings call. Goenka did not mention whether the binding offer has been submitted by a strategic investor or financial investor.

In November 2018, the promoters of Zee Entertainment said it will sell up to 50% equity stake in the company to a strategic partner (also open to financial investors). The company had said a right global strategic partner will help in transforming Zee into a global media-tech player with a unique offering of content to mainstream audiences in over 170 countries ‘putting it into a king position globally’.
Reportedly, US-based Comcast and private investment firm Atairos is considering to partner with PE fund Blackstone and James Murdoch’s family office Lupa Systems to bid for Zee.

“If the second offer were not to come in, then of course we will be going with the binding offer that is on table. But I am quite hopeful the second offer will also come in,” Goenka said. The stock price of Zee Entertainment ended at Rs 360.95 apiece on the BSE on Tuesday, down 0.66%.

Earlier in the day, Zee reported a 62.6% year-on-year rise in consolidated net profit after tax to Rs 530.6 crore in the three months to June. The firm’s earnings before interest, tax, depreciation and amortisation (Ebitda) increased 16.6% year-on-year to Rs 659.8 crore in Q1FY20. Revenues in the quarter increased 13.3% year-on-year to Rs 2008.1 crore due to strong performance of domestic broadcast and digital businesses, the company said. Domestic subscription revenue grew by 46.7% to Rs 624 crore while advertising revenues grew by 4.2% during the quarter.

In an interview to a local publication in December, Goenka had said the company’s objective is to enable people to consider Zee as a mainstream media company like a Disney or a Fox or NBC.

The proceeds from stake sale will help in repaying Essel Group’s debt. The total debt of the group is over Rs 16,000 crore while promoter debt is around Rs 13,000 crore. In an interview to a business daily in April, Essel Group’s chairman Subhash Chandra had said the sale of assets of the group’s infra business is expected to be completed between July and September that will help repay Rs 15,000-16,000-crore debt of operating companies and Rs 3,000 crore of corporate debt. “Rest will be taken care of by the stake sale in Zee,” he had said.
Among the listed portfolios of Essel companies, Zee has the highest market-cap and is the only company with a net cash position, analysts say.

The total promoter pledging in Zee as of June 2019 stood at 63.98%. Essel group secured a formal consent with lenders, which are having a pledge on shares held by the promoters in Zee Entertainment Enterprises and Dish TV India. As per the consent, the lenders have agreed that there will not be any event of default declared till 30th September 2019 due to the movement in the stock price of Essel Group’s mentioned listed corporate entities.

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