Likely Zee News + DNA merger a logical step forward

Zee News the listed entity of the Zee group plans to merge Diligent Media Corporation, publisher of DNA newspaper with six editions as per a notice filed with the stock exchanges. As per the notice, Zee News to be shortly renamed as Zee Media has plans to merge its news broadcasting and print/newspaper businesses since both are entities controlled by same promoters.

Zee News in the notice to the stock exchanges has said the following, “Considering the growth plans of the company and the business synergies in print and electronic news media, the board has approved in-principle combination of 'news publication business' of Diligent Media Corp Ltd - a promoter group entity engaged in printing and publication of English daily 'DNA' and the 'news broadcasting business' of the Company. A committee constituted by the board shall engage / appoint independent professionals to advice on the appropriate structure / manner of combination and its valuation, cost-benefit analysis, procedural and others aspects for consideration by the audit committee and the board in due course.”

The merger if gone through will lead to a lot of synergies as essentially there are a lot of areas that can be merged on a single platform. There are several reasons why this proposed merger would be of benefit. It will help cater to consumers who follow news on different platforms, regions and languages. Offering content to the viewers and readers of both the mediums will be easy and cost effective. It will also enable the Zee group to leverage their resources more judiciously and be cost effective, there would be lower marketing spends. The cost savings and synergies will result in higher earnings for the shareholders and stakeholders. Sharing of news rent, reporters, photographers, OB vans etc would be possible leading to better deployment of resources and avoiding duplication of the same. Cross selling of the news, content, products and joint promotion of events of the group would also be possible to the consumers and advertisers.

Both the businesses have individual strengths that can be exploited. Zee News is one of the leading Hindi news channels with strong viewership across states of Chhattisgarh, Madhya Pradesh, UP/Uttarakhand, Bengali, Telugu, Marathi besides a business channel in Hindi. On the other hand DNA with six editions as per the latest IRS Q4-2012 has cumulative daily readership of over a million. Over the past few years of its operations the newspaper has expanded its reporters and photographers strength, depth and variety of genre of news content and overall media presence through its increasing clientele. The merger if happens, the modalities of which are yet to be worked out, will further assist the Zee’s news business to emerge as a powerhouse in its core areas of operations. It will give the merged entity a higher bargaining power in an industry characterized by fierce competition.

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