23 | Page
Entertainment on D-Street By: Mudit Jain and Trish Gupta (Shri Ram College of Commerce (SRCC), Delhi) Zee, a name that rings in every house, office, or institute, is among one of the most popular entertainment streaming companies in India. It is a company that straddles across platforms such as cable television, digital video streaming, production operations, music, and video libraries. The company, irrespective of having a solid presence in the country, wasn’t able to take advantage of that popularity in the stock market until one fine day, the investors tried to change the company’s management. It is a stock that was always loved by foreign institutional investors but could not come into the limelight during the ongoing bull run in the market. Zee’s trading chart over the five years shows the sorry figure of the company until a recent spike reignited domestic investor interest in this company. A share that was always seen swinging between Rs.150-220 levels until midSeptember 2021, suddenly crossed all the limits and reached a high of Rs.350 within a week. A company that the traders always looked upon suddenly became the hottest stock on Dalal Street. So, what motivated the stock to go “beyond the limits” and will it deliver a blockbuster performance just like some of the shows it telecasts is the question of the hour. The company had been delivering standout financial results from 2017 until the fateful year of 2020. Despite this, the share of foreign investors in the company has always been on the rise since 2018. However, the robust performances in the books continuously failed to garner attention in the stock market. From 2016 to March 2020, the stock had shed nearly 78%, which was a very concerning issue for a company having no clear financial problems. When everyone was betting on the doubling of the stock, it was focusing more on getting reduced to half. The stagnant movement of the stock was painful for the investors, but a series of positive news sprung the hopes, and within a week, the share was up 79%. Percentage-wise the share was as much up in one week as it had lost over the last 4-5 years. Various news pieces have helped kick start the engine once again but will it be sufficient to keep the motor running is the point that needs to be considered. Just a day before the historic surge, i.e., on 13th September 2021, two independent directors on the board of Zee Entertainment Enterprises, Ashok Kurien and Manish Chokhani, resigned from the company’s board ahead of the Annual General Meeting. Institutional Investors Advisory Services (IIAS) raised severe corporate governance concerns in the company and had asked shareholders to vote against the reappointment of the duo on the company’s board. The company was expecting some positive outcome, and suddenly on 14th September 2021, a piece of news popped out in the market stating that Mr. Rakesh Jhunjhunwala bought 50 Lakh shares of Zee Media Entertainment Ltd., after which the market price of the share rose by a whopping 40% in a day. With the Big Bull entering the market, the retail individual investors increased their holdings along with a few other marquee fund managers. Also, some institutional buying came into the market as the brokerages turned positive and gave high targets for the stock. Therefore, this news acted as a cherry on the cake for the existing shareholders. But this was not enough, as something much bigger was about to come. On 21st September 2021, Zee Entertainment and Sony Pictures Network signed a merger deal. According to this deal, Sony Pictures will hold a 52.93% stake in the merged entity, while shareholders of Zee Entertainment
