Thanks, I remember going through all above when I considered Zee for investment sometime back. I just wanted to mention here that Gaming, Music and other Sony business do not seem to be part of deal, which your post above also clears for everyone.
My thesis does not change. Thanks
I have read one article where Punit Goenka mentioned about ipo bidding so I am really not sure if sport channel is out of deal⌠Will try to find that article and share. Thanks!
Issue is that this deal is being done by a management which has little skin in the game. Looks like they will retain their holding at 4% in combined entity at cost of other minority shareholders.
Another question is how will they increase their stake to 20%. What is mechanism? If it is open market purchases, from where are they getting funds after being forced to sale their stake. If it is open market purchase/pref issue, wonât they want to keep prices depressed.
Why are we relying on Goenka family? Its good if Goenkaâs increase the stake, if not â company is not orphan; Sony will also be a promoter with 50% holdings.
Good question. Iâm confused about this part too. Going from 4% to 20% is a substantial chunk, and the mechanism they are going to deploy to achieve this needs to be laid out in plain terms. This whole deal seems like a scheme to strengthen the Goenka family holdings than anything else.
Its already laid out and clarified by the management before too. The increase can be only through open market purchase and 20% is the maximum threshold limit
It is scary considering their corporate governance record of past.
Read this in May 22 Concall transcript- Punit Goenka: âOn the content side, especially on the film side, please look at it from this perspective that while on linear business we are having the amortization over so many decades that in the digital business is not even started so far. Therefore, we are not completed the first 5-year cycle. Thatâs why every inventory just keeps getting added until and unless the first 5~year cycle is completed.â
Does this mean content in digital business is not getting amortised so far? If true, then the potential losses in Zee5 business can only go up. If anyone has studied this please respond. Thanks.
Do you think that there will be a hot in revenue due to the lack of funding in the start-up ecosystem? advertisers in the past year have been crypto companies and other such fintech startups that might not have the best access to capital for the next year or two.
Most crypto companies have already moved to Dubai and other greener pastures so theyâre out of the equation.
Advertising game would be hard if US economy slips into recession. VC funding will dry out and so-called startups which were on user acquisition spree will start cutting corners. The smoke is already there with firms laying off people.
Its ironic how the price has corrected back to where it was before the Merger was announced.
Discl: Have a small position.
Iâm fairly new to this sector. I have a question - do you think it will invest in it since people are more into bigger OTT platforms.
ZEEL Q2 FY23 Result Update:
Future Commentary by Management:
Ad revenue was down in Q2 FY23. Likely to pickup in Q3 FY23 as festive season is going on. Expects a very small growth in revenue in FY23.
ZEE5 subscription has performed well. But overall subscription revenue has reduced. NTO 2.0 is delayed until Marchâ23.
Movie investment has increased which is a negative surprise. Movie releases have underperformed. Aims to increase movie spend with more focus on regional movies. More acquisitions of movie rights will keep inventories at elevated levels for a few quarters.
EBITDA margins have been affected due to more A&P spend which was due to movie releases. There is also a rise in programming cost.
ZEE5 is an EBITDA loss business which will still continue for a few more quarters.
Merger with Sony is expected to complete in Marchâ23. The focus will be more on Sports entertainment after merger.
The rebound in market share in Hindi/Marathi/Tamil GEC will be key to overall market share and ad recovery.
In recent news, Zee Entertainment and IndusInd Bank have resolved their disputes and mutually entered into a settlement agreement, resulting in the withdrawal of insolvency proceedings.
get more details on this link
Arenât they using companyâs monies to settle this obligation ?
It is just shocking to see that 4% of companyâs owner is using companyâs money to settle another promoter related companyâs debt obligation.
Siti Networksâs lender using this opportunity (merger with Sony) to make sure they get paid by Zee.
Thanks!
Very true. I wonder why Sony did not object to this?
Well canât it be the case that Sony wants merger as much as Zee wants it⌠? Just a thoughtâŚ
Moreover I donât see zee md distributing freebies at all, there will certainly be some catch on recovering this from Siti going forward.
Just a short term settlement to get merger done
I suspect that if you own any financial (lending side) company - you will know how hard it is to recover money (even with secured assets). Lender are using this opportunity to recover their debt.
On Sonyâs perspective, this deal was anyway good at around 250/shares and get controlling stake and after merger current promoter canât go beyond 20% or something and they were pursuing this deal in past as well (remember sport deal). They got approached by PG (to save his job) when Invesco fiasco was going on so it is quite obvious they had leverage and it is not very good for minority shareholder and top of it current promoter also get 1100 crs non-compete fee so sony has to adjust it against company valuation.
Thanks!
Disc. No holding. tracking.
