INSUBCONTINENT EXCLUSIVE:
The opportunity to own the largest broadcaster in a consumer market of 1.3 billion people doesn't arrive all that often; even more rarely
does it come after a single-day 26 percent rout in the stock.The special situation has arisen because of Indian infrastructure
financier-operator ILFS Group's sudden $12.8 billion bankruptcy
Analysts who believed the tremors would reach other shadow-banking entities like Dewan Housing Finance Ltd
Yes, Dewan's loan disbursements fell 95 percent from a year earlier in the December quarter amid pressure on the mortgage lender to
But the shock waves have now spilled beyond finance to reach the glamorous world of television content.Subhash Chandra, the founder who
controls 41 percent of Zee Entertainment Enterprises Ltd., is putting half his shares on the block after making wrong-way leveraged bets in
unrelated industries such as infrastructure, a mistake the tycoon acknowledged in an open letter on Friday evening
ILFS found a mention in Chandra's mea culpa
The implosion of the highly rated lender raised financing costs for everyone who had borrowed short-term funds to invest in long-term assets
such as roads, power stations, waste-management plants, or in the case of drugmaker Sun Pharmaceutical Industries Ltd.'s billionaire
founder Dilip Shanghvi, apartment complexes and windmills
The collateral for these forays in most instances was shares of their successful, publicly traded operating companies.But as both Shanghvi
and Chandra recently found out, collateral can wear thin very quickly
All it takes is a whistleblower complaint of financial irregularities or a news article insinuating links with a company allegedly dealing
in unaccounted-for cash to make the stock price plunge
Strenuous denials or defamation lawsuits can't quite set things right with creditors left edgy by ILFS's defaults, though a weekend
meeting with lenders does seems to have bought Chandra time to conclude the sale of his crown jewel.Zee, where I worked briefly in the
1990s, is a content powerhouse with a 20 percent share of India's traditional television viewing market
The network also boasts 35 percent Ebitda margins despite heavy investment in Zee5, a fast-growing digital app
There's no confirmed bidder yet, but according to a report in the TheIndianSubcontinent, Zee may be of interest to Amazon, Apple Inc.,
Tencent Holdings Ltd., ATT Inc., Singapore Telecommunications Ltd., Comcast Corp
Mukesh Ambani, India's richest man, is also likely to join the contest, the article said
If Ambani snags the asset, his triple play of carriage, content and commerce could deal a blow to Amazon boss Jeff Bezos's
With an enterprise value of $4.8 billion, and more cash than debt, Zee has a good chance to take on 21st Century Fox Inc.'s
local-streaming platform, HotStar, as well as Netflix Inc
Lenders have agreed to a standstill
While that helped the stock recover from Friday's carnage, lenders' patience will have a limit
General elections will be held soon; and the opposition Congress party, which has started fancying its chances in the polls, is no fan of
Zee Media Corp.'s news operations
The TV mogul has also put a chunk of his road portfolio on the block, though with the beleaguered ILFS also looking to offload its transport
investments, buyers are spoiled for choice
It'll be easier to deleverage by selling Zee than by disposing of a bunch of highways
If the pressure to come up with liquidity forces Chandra to cede control of his TV empire, then the new owner will have the deadbeat
infrastructure financier ILFS to thank.(Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services
He previously was a columnist for Reuters Breakingviews
He has also worked for the Straits Times, ET NOW and Bloomberg News.)Disclaimer: The opinions expressed within this article are the personal
The facts and opinions appearing in the article do not reflect the views of TheIndianSubcontinent and TheIndianSubcontinent does not assume
any responsibility or liability for the same.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is
published from a syndicated feed.)
