Zee Entertainment Enterprises - &TV: Risky, But Potent Gambit; Company Update :: Edelweiss

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Zee Entertainment Enterprises (ZEE) plans to launch its second mainstream Hindi GEC, &TV, in Q4FY15. This is not ZEE’s first foray in the second mainstream GEC space, as the company had tried in FY08-09 with the debacle of Zee Next. In our view, combined market share of Star Plus and Life OK at ~39% in the Hindi GEC space vis-à-vis mere ~18% for Zee TV is the reason why ZEE is launching &TV. However, competition in the Hindi GEC space remains intense also with the success of Life OK and launch of Sony Pal. In this backdrop, ZEE seems to be better prepared having learnt from past failures, success of new channels in other genres, superior distribution network owing to digitisation, lower carriage fees and expected recovery in ad spends in FY16.

New Hindi GEC | Success rate has been low

Till 2008, the Hindi general entertainment channel (GEC) space was dominated by Star Plus, Zee TV and Sony. Thereon, within a span of 16 months from December 2007 to March 2009 five new GECs - Colors, Zee Next, 9X, NDTV Imagine and Real - emerged on the scene. While most of these new channels failed, Colors stayed put and maintained its spot among the top-3 Hindi GECs.

ZEE hopes to avoid a debacle like Zee Next

ZEE had planned to allocate INR2.5bn investments for Zee Next over a period of 3 years. However, poor execution/ sampling led to Zee Next folding up. &TV is targeted at audiences with a more contemporary outlook. As per media reports, Razia Sultan, Begusarai and the well-acclaimed international singing show, The Voice would be some interesting shows on &TV. We believe &TV could clock loss of ~INR7bn in the next 3-5 years (similar to other mainstream Hindi GECs) and break even only thereon.

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https://www.edelweiss.in/research/Braveheart-Series--Zee-Entertainment-Enterprises--AndTV-Risky,-But-Potent-Gambit;-Company-Update/27994.html