Zee to re-enter teleshopping business after buying two India Today Group firms

Subhash Chandra-controlled Zee Media Corporation Ltd is all set to return to the teleshopping business with the launch of a new channel.

The company has announced the acquisition of two companies owned by Living Media India Ltd (also known as India Today Group) -- Today Merchandise Pvt Ltd (TMPL) and Today Retail Network Pvt Ltd (TRNL). TMPL and TRNL have been providing back-end inventory and logistics services to Living Media's in-house home shopping network operating under the online platform www.bagittoday.com. Unlike most players in the space, the India Today Group doesn't have a TV channel providing the service.

Zee Group was the first to have launched a home shopping TV channel in India in April 2004. Called Asian Sky Shop, the channel folded up a few years ago after the business ran into losses.

With the acquisition of TMPL and TRNL, Zee is looking at relaunching Asian Sky Shop. "One of the first home-shopping brands in India, Asian Sky Shop still has a strong connect with Indian consumers. We will resurrect the old brand or might start afresh,” said a senior Zee Media executive on the condition of anonymity.

Zee Media will complete the buyout in two stages. By June, it will acquire 49 per cent stake in both companies for about Rs 36.87 crore. Over the next four years, it will increase its stake to 80 per cent for Rs 116.6 crore.

“The idea behind acquiring bagittoday.com is that if viewers want to buy a product shown on the channel, they can quickly go to the site to place the order instead of making a phone call," said the executive mentioned above.

Teleshopping is not a new phenomenon in India. There are already three-four channels operating in the space. Though entering a somewhat crowded market, observers feel, Zee has a good chance of getting a head start over its rivals because it already has a solid distribution network, both cable and satellite as well as direct-to-home.

Also, the two companies Zee is acquiring already have a solid backend inventory and distribution network in place. Besides, it has the licence to launch a home shopping channel and hence, wouldn't have to wait for regulatory clearances.

"Zee has the advantage over standalone home shopping broadcasters as it doesn't have to contend with high carriage fee," said an industry veteran, who didn’t want to be named. According to industry estimates, broadcasters have to shell out Rs 2,000-2,500 crore as carriage fee to cable operators.

According to industry estimates, the size of the home-shopping industry in India is around Rs 5,000-6,000 crore. Network18-owned Homeshop18 has a lion's share in this market, followed by Shop CJ--a 50:50 joint venture between South Korea-based CJ O Shopping Co Ltd and US-based private equity firm Providence Equity Partners LLC--and Naaptol.

Mihir Shah, vice president at Singapore-based media research agency Media Partners Asia, argues that teleshopping has potential to grow even when e-commerce in the country is expanding by leaps and bounds. “Theoretically, one can argue that the rise in broadband penetration will challenge television commerce. But we have observed in mature markets like the US that both home-shopping and e-commerce have found their own space, complementing each other.”