Breaking Zee Entertainment Enterprises to buy 9X Media

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Zee Entertainment Enterprises Ltd (ZEEL) will buy 9X Media for around Rs 170 crore as part of a broader plan to build a strong vertical around music channels, music labels and film production across languages. The FM radio business, being acquired by sister company Zee Media Corporation Ltd (ZMCL) from Anil Ambani’s Reliance Broadcast Network, will further provide a strategic fit to the group’s growth plans. The deal is attractive on valuation terms as the price is one-time 9X Media’s sales, a source said. 9X Media, which runs a slew of music channels, has an annual turnover of around Rs 170 crore. “In FY17, revenue fell due to demonetisation but normalised revenue is around Rs 170 crore,” the source said. Though 9X Media has a marginal loss, it will be profit neutral for ZEEL due to the network strength, the source added. Deals in the TV media space are generally struck at a higher ratio. According to Ashish Pherwani, media and entertainment advisory leader at EY India, TV media sees deals at upwards of 2.5 times sales. He declined to comment on specific deals. Private equity firm New Silk Route (NSR), which owns close to 80% stake in 9X Media, has been hunting for a buyer since 2013. The exit route took a long time to come as deals in the music television space in India are hard to conclude. 9X Media operates its Punjabi music channel 9X Tashan through a joint venture. Sandeep Bansal, who grew up as a cable TV operator, has a 34% stake in the JV. With ZEEL taking over the entire business, the JV will get dismantled. “9X Media has a multi-entity structure. ZEEL will take complete ownership of all the channels,” another source said. ZEEL’s interest in gobbling up 9X Media comes at a time when it is increasing investments in movie production and music label businesses. The company, which has 11 movie channels across Hindi and regional languages, plans to gradually produce 10–12 movies a year. Acquisition of music rights is also being ramped up. ZEEL’s advance amount towards investments in movies stood at Rs 446.1 crore at the end of FY17. Advances are paid for acquisition of future rights and advance purchase of rights of movies under production. During FY17, Zee Music Company acquired the music rights to more than 143 movies including 58 Bollywood movies. The list of music acquisition includes titles like ‘Half Girlfriend’, ‘Dangal’, ‘Raees’, ‘Baar Baar Dekho’ and ‘Flying Jatt’. “The value of the music genre has to be seen as a TV plus digital combined market. We will see bigger TV broadcast networks launching music channels in more regional languages. There is a business case as they are also producing movies,” said Pherwani. By acquiring 9X Media, ZEEL will get the largest and only pure-play music TV vertical company in India. Besides a distinct positioning, there is also a ready revenue that ZEEL will get from the 9X Media acquisition. “For ZEEL to scale up to that kind of revenue from the music TV vertical would have taken years. The valuation also looks reasonable. Besides, this will be a synergistic move as the company has already decided that Zee Studios and Zee Music will be important future growth drivers,” a media analyst said. 9X Media runs music channels 9XM and 9X Jalwa in Hindi, 9X Jhakaas in Marathi, 9XO in English and 9X Tashan in Punjabi. It also has SpotboyE, a digital offering of Bollywood news, gossip, music reviews and other updates. SpotboyE also streams the TV channels of 9X Media. While flagship channel 9XM plays Bollywood hits, 9X Jalwa focuses on retro music, particularly music from the ‘90s. 9X Jhakaas was the first Marathi music channel to be launched and is seeing growth with more Marathi movies becoming popular and being produced. “9XM was the first baby step towards the future transformation of music television. A future where the focus will be on building a brand with a distinct personality that stands for a particular music. A stepping stone for future music brands to shift focus from being a platform for film producers and advertisers, to providing focused entertainment for its viewers,” said Vikas Varma, who worked as senior VP for the network in its early days and is now CEO of Dicky “Speak” Media & Content Consultants. Music TV brands have gone through several upheavals and turbulent times over the years. “While the music TV genre has seen many ups and downs with a lot of channels changing their positioning, 9X Media has not strayed from its basic proposition. Its offering of music content has been consistent and they have persisted with the animated characters,” a senior TV executive said. So, will the consolidation impact smaller networks like Media Worldwide, which operates Music India (Hindi music channel), Sangeet Bangla, Sangeet Bhojpuri and Sangeet Marathi? Media Worldwide promoter Prashant Chothani believes that the space will continue to be overcrowded and players with management expertise will survive. “We have seen all kinds of onslaughts in the past and have grown to a fleet of four music channels. We may see another new player launching music channels soon,” he said. The truth is that the space is well populated and there is excess supply of ad inventory. The pricing power is absent, and for revenue scale-up some channels have experimented with non-fiction and youth non-music content. For bigger networks, the music channels are a part of their bouquet of larger channels. It helps them to attract younger audiences and rope in advertisers who are looking at music channels as frequency-builders. Chothani believes that the purchase of 9X Media by ZEEL will be a good thing for the industry, if it happens. “It is a good sign that the music TV space is able to sew in deals,” he said. New deals in the music television space, however, will be tight. For private equity firms, the size of the business is too small. Strategic investors also will be hard to find as bigger TV networks seem to have exhausted their appetite to gobble music channels. Sony Pictures Networks India (SPNI), which was weighing 9X Media first, has decided to grow organically in the space with the launch of Sony Rox HD. While Sony Mix is positioned as a music channel for all ages, Sony Rox HD is more youth-focused and contemporary. ZEEL, which already runs two music channels in ETC and Zing, will soon have its plate full with the addition of the 9X Media channels. Viacom18 has a strong vertical with flagship channel MTV while Star India is struggling with Channel V. “ZEE is getting aggressive in the music and movie production space. The group will also have radio. The strategy is to own IP and also be in the business of commercial exploitation of these rights,” a media analyst at a broking firm said. After selling its sports business to Sony for $385 million, ZEEL has been on an acquisition spree. The company snapped up the TV broadcasting business of Anil Ambani and made small-ticket acquisitions in tech start-ups like Margo Networks (80% stake for Rs 75 crore) and Tagos Design Innovations (12.5% for Rs 16.15 crore) to expand its digital business. In June, ZEEL agreed to acquire the remaining 49% stake in India Webportal for $30.7 million (Rs 200 crore) to take full ownership of the digital asset.

Read more at: http://www.televisionpost.com/special-reports/zeels-purchase-of-9x-media-valuations-and-impact-on-music-tv-genre/ | TelevisionPost.com
 
Great news abhishek bro :tup
170 cr. Will be affordable & profitable thing for zee.

Please try to post only important part of article. Whole article is not needed bro :tup
 
India broadcasting giant, ZEE Entertainment Enterprises Limited (ZEEL) is reportedly getting closer to acquire the 9X Media clutch of Hindi and regional music channels.

The deal, which is set to be formalised as soon as this month, will see ZEEL take control of popular channels – 9XM, 9X Jalwa, 9X Bajao, 9XO (English), 9X Jhakaas (Marathi), 9X Tashan (Punjabi) and digital website, SpotBoye.

A spokesperson from ZEEL told Economic Times, “From time to time we keep looking at opportunities as part of our on-going business development. With regards to the same we have had certain exploratory discussions with 9X Media and its shareholders; however, no deal has been reached as yet. Needless to say, we shall inform the exchanges immediately if our talks fructify into any definitive deal.”
ZEEL gets closer to acquire 9X music channels
 
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