(Updates with comment from analyst in fourth paragraph.)
Nov. 17 (Bloomberg) -- Zee Entertainment Enterprises Ltd., India’s biggest publicly traded media broadcaster, is in talks with Comcast Corp. and Time Warner Cable Inc. to expand distribution in the U.S. and plans to more than triple the number of homes it reaches in the country next year.
Zee Entertainment’s programming now reaches about 10 million U.S. homes and the goal is to expand to 35 million to 40 million by the end of 2012, billionaire Chairman Subhash Chandra said. The company’s New York-based Veria Living network focuses on health and wellness.
The plan comes as the company faces rising competition in India from Rupert Murdoch’s Star TV, Viacom Inc., Sony Corp. and Walt Disney Co., which this year said it would buy out its Indian partner. Expanding in the U.S. will also help Zee target the 2.8 million Indian Americans living in the country.
“Zee’s trying to expand into the interiors of countries that have Indian diaspora,” said Ankit Kedia, an analyst at Centrum Broking Pvt. in Mumbai. He has a “buy” rating on the shares. “In North America, competition is getting aggressive-- Zee is losing its stronghold there. The good thing is they are investing more and more in expanding distribution.”
Maureen Huff, a Time Warner Cable spokeswoman, and Jennifer Khoury, a Comcast spokeswoman, declined to comment.
$250 Million Fund
Shares of Zee Entertainment rose 0.8 percent to 114.90 rupees as of 12:16 p.m. in Mumbai. India’s benchmark Sensitive Index, or Sensex, was down 0.2 percent. Shares of Zee Entertainment have lost 22 percent this year.
The company also said yesterday it has created a $250 million fund for development, production and acquisitions by Veria Living. That’s an increase from $100 million allocation in the past, Chandra said.
Chandra, 60, is India’s 22nd richest person with a net worth of $2.6 billion, according to Forbes. The former rice trader founded Essel Group, which includes Zee Entertainment and Dish TV India Ltd., in 1982.
Dish TV, an Indian direct-to-home TV service provider, started in 2004 and had 11.7 million subscribers as of November, according to the company’s website. Dish TV competes in India with billionaire Kalanithi Maran’s Sun TV Network Ltd., and Tata Sky Ltd., a venture between India’s Tata Group and Star Group, a unit of Murdoch’s News Corp.
Satellite television subscribers in India surged to 38.5 million at the end of June from 23.8 million a year earlier, according to data from the nation’s telecommunications regulator.
The pay-TV industry is likely to consolidate as a result of new government regulations, Chandra said. India’s cabinet on Oct. 13 approved a bill that makes it mandatory for TV companies to move to digital broadcasting. All urban areas are expected to transition from analog to digital systems by Nov. 30, 2014, and all rural areas by March 31, 2015.
There are more than 100,000 cable operators in India, Chandra said, and many are too small to be able to make the investments necessary to convert to digital. As a result, many will try to sell and bigger companies such as Zee will make acquisitions.
“We’ll see consolidation,” Chandra said.
The price to acquire pay-TV operators is coming down as many try to sell, he said. The price has dropped from about 10,000 rupees ($197) per household to between 4,000 and 5,000 rupees, he said.
His company will make acquisitions if the prices are right, Chandra said.
--Editors: Peter Elstrom, Arijit Ghosh, Anand Krishnamoorthy.
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