The segregation is aimed at enabling distinct focus of investors to invest in some of the key businesses and to lend greater focus to the operation of both the diverse businesses
BestMediaInfo Bureau | Delhi | October 31, 2016
Within a month of revamping the English daily DNA and launching it in Delhi market, Zee Media Corp. Ltd (ZMCL), which operates Zee News and Zee Business channels, has announced the demerger of its print media business into Diligent Media Corp. Ltd (DMCL).
The company said in a filing with the Bombay Stock Exchange that the board of directors of ZMCL and DMCL have approved a proposal to independently list its print media business on the stock exchanges.
âIn order to enable distinct focus to the operation of both the businesses carried out by Zee Media i.e. TV news and print media, it is proposed to segregate the print media business undertaking into DMCL,â the company said in the filing.
Explaining the rationale of the demerger, the company said, âThe proposed demerger will enable more focused management and greater visibility on the performance of individual businesses. It will also enable attribution of appropriate risk and valuation to different business by the shareholders based on their respective risk-return profile.â
In its BSE filing, the company said that both the TV and print businesses have different set of regulations to comply with, which include restrictions on the extent of foreign investment depending on the business activity carried on by it. As per the FDI Policy Guidelines, FDI is allowed upto 49% under approval route in companies engaged in the news and current affairs business while FDI upto 26% is permitted under approval route in newspapers business.
âIn order to enable distinct focus of investors to invest in some of the key businesses and to lend greater focus to the operation of both the diverse businesses, it is proposed to segregate the print media business from TV,â the company added.
The proposed restructuring is subject to regulatory approvals and will come into effect from April 1, 2017. Based on the financials for the six months ended on September 30, 2016, the company projected that the proforma PBT (excluding exceptional items) of Residual consolidated Zee Media will improve by approximately Rs 25 crores on account of the demerger.
The company also announced the consolidation of its print media entities Pri-Media Services Pvt. Ltd and Mediavest India Pvt. Ltd with DMCL.
To streamline the news television business entities under one umbrella, the company has also proposed a merger of Maurya TV Pvt. Ltd, which operates Zee Purvaiya (a regional news and current affairs channel), with Zee Media.