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A shareholder in Zee Telefilms may now get shares in three new outfits — Zee News; Wire & Wireless, which owns cable operations in select cities; and Dish TV that owns the fledgling Direct-to-Home business. These businesses do not make a significant contribution to group earnings. The new ownership structure does, however, create clarity and removes concerns about the permitted levels of FII holdings. In an intensely competitive market, the earnings outlook for the news arm does not appear to be bright. Though Dish TV has a head start in terms of the time of its launch, we expect Tata-Sky to emerge as leader in the DTH space. We have not been positive on Zee (headed by Mr Subhash Chandra — in the picture) for several years now, primarily due to its slack content. The stock has been an under-performer and we prefer to remain cautious despite this effort at creating a focused business structure. Shareholders may retain the stock and take a call when they get shares in the new companies, which will also be listed.

S. Vaidya Nathan

More Stories on : Radio/TV | Restructuring | Zee Telefilms Ltd

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