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Zee set to buy 9X in novel deal

The deal is expected to cost Zee about Rs 65 crore, sources familiar with the development said.

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Zee Entertainment Enterprises Ltd (ZEEL), India’s largest media company, is set to acquire 9X, the Hindi general entertainment channel belonging to the loss-making INX Media Pvt Ltd.

The deal is expected to cost Zee about Rs 65 crore, sources familiar with the development said.

Zee and INX officials were not available for comment.
For Zee, the synergies from the deal are unlikely to be significant from a content and viewership point of view, but there could be implied tax benefits, besides an additional channel licence in times of tight government approvals, said sources.

9X owes around Rs 130 crore to creditors, who are expected to take a substantial haircut and okay the transfer of ownership.
The INX management is expected to pitch in with some money of their own over and above the Zee funds to seal the deal with the creditors, who are expected to agree considering the options they have.

INX is then expected to spin off  9X, which will be taken over by Zee after a court approves the arrangement.

Zee is understood to have walked the road with the INX management, currently being steered by media veteran Pradeep Guha — a former CEO of the Zee group who assumed INX’s chief executive position recently — over the past three-four months.

Guha, who also has a small equity position in INX Media, was entrusted with the recast plan by INX’s private equity investors Temasek Holdings, New Silk Route, New Vernon Private Equity Fund and Kotak Private Equity.

The decision to exit 9X seems to be an outcome of this recast plan as the channel wasn’t able to hold its own in an arena of white-hot competition.

INX has racked up huge losses that, on a carryforward basis, are expected to touch over Rs 800 crore by the end of the current fiscal year for its entire media business.

INX had earlier exited its news channel (INX News) business when the promoters sold it to Vinay Chhajlani, an Indore-based promoter of regional dailies Naidunia and Nav Dunia.

After the 9X sale, INX will be left with just the music channel 9XM.
Again, this is a business that has seen a sea-change. Segment leaders such as Channel V and MTV have turned programming structures on their head — so much so that today music is only incidental, while reality shows are the money spinners.

INX Media was launched in 2007-08 after its founder Peter Mukherjee cobbled together $170 million through a private equity fund. After two meandering years, the company went for a restructuring in 2009, which saw promoters Peter Mukherjee and his wife Indrani stepping down from the management.

The Mukerjees continue to be shareholders, but the management is largely handled by Guha on behalf of the private equity investors.

Disclosure: The Zee Group is part-owner of Diligent Media Corporation, which publishes the DNA.

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