Zee buys 50% in Ten Sports

$57 mn deal to help Zee get a foothold in cricket broadcasting.

Zee Telefilms has acquired a 50 per cent stake in Ten Sports at an enterprise valuation of $114 million (or $57 million for the stake sold), from Dubai-based Taj Television.

The deal will help Zee get a foothold in cricket broadcasting as well as production expertise where they currently have only a limited presence.

Zee and Ten Sports have also bid separately for the ICC World Cup properties for 2011 and 2015. In the event of either winning the bid, the content will be shared across the two platforms.

"We have taken a controlling stake but after 2009 we will have the option of buying additional equity," said Subhash Chandra, chairman, Zee Telefilms.

Zee, which will acquire one of the best production facilities and exclusive rights over cricket tours in Sri Lanka, West Indies, Pakistan and Sharjah with this deal, has projected the yearly revenues of Ten Sports to be $50 million for the three years.

The revised composition of Ten Sports' board of directors will see four directors from Zee and three from Ten Sports.

"It reduces the number of players in the market. Besides, we also expect a correction in a market that has seen prices of property rights go through the roof. Now, we will not be bidding against each other but together," said Himanshu Mody, business head, Zee Sports.

The benefits for Ten Sports, whose talks for a stake sale with Sony Entertainment Television and Reliance Communications fell through, are many.

"We will gain from Zee's distribution and production infrastructure. Also, while our expertise is sports, theirs is broadcasting, which will give us a strong foothold in India and abroad," said Sharmistha Rajwani, managing director, Ten Sports.

Ten Sports is being distributed by Sony's One Alliance, an agreement that runs till 2009, but it is likely to enter the Zee bouquets after that and may benefit from Zee's strong international distribution.