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Title: Feasibility study of mergers and acquisition opportunities in the indian media and internet sector
Authors: Verma, Santosh
Daga, Anant Kumar
Keywords: Zee telefilms limited;Satyam infoway;Mergers & acquisitions - media sectors;Indian internet sectors
Issue Date: 2000
Publisher: Indian Institute of Management Ahmedabad
Series/Report no.: SP;000726
Abstract: The month of January last year witnessed one of the greatest mergers in the history of the corporate world. The largest ISP in the US decided to merge with the largest media company in the US thus leading to a merger of sorts. AOL time warner as the merged company would be now called would leverage each other's strengths to make a substantial impact on the way they are going to earn revenues in the future. Taking a cue from this historic merger which received federal approval only this week. We decided to study the feasibility of replicating a similar scenario in our country. After having studied the Indian media and internet sector in detail. We came up with the recommendation of merging zee telefilms limited with Satyam Infoway. The reason for this is multifold. Zee is the largest media company in India and also owns one of the largest cable networks in the country called suitably. The subscriber base of suitable is to the tune of 5 million. Zee has already entered, into the ISP business, in a small way but is not doing well, in that space. On the other hand; Satyam Infoway is the largest private ISP in the country with interest in online advertising and consumer e- commerce, corporate network, and technology services, web solutions and B2B e-commerce. It has an ambitious plan of getting into cable ISP in the near future, and for this purpose, it plans to make a huge amount of capital expenditures. Thus, it could be evidently seen that one wants to get into the business of the other in a big way. Moreover, with broadband technology in place the distinction between a media company and an ISP will cease to exist, as consumer become more value conscious and demand more value for their money. This will see ISPs offering not only internet services but also broadband content. This is another way in which the merger will benefit both the companies. The existing cable network of suitable can be used by Satyam Infoway to provide cable ISP in the near future. Moreover, it could also earn revenues from e-commerce by making its portals the homepage for all the subsidiaries of suitable. The portal of Satyam Infoway called sify. com is the second largest portal in the country. Satyam could also use the content of zee telefilms for the purpose of streaming it to the consumers once broadband is in place. This is world result in the consumers sticking to the cable ISP of Satyam once it starts providing the same. Thus they could be a lot of synergies that could be reaped from this merger both in terms of cost savings and for strategies reasons and therefore it makes a lot of sense for these two companies to merge into a single entity. However, they could arise some issues when the merger is actually implemented, and it is, therefore, important that the post-merger integration is properly implemented.
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