Zee has pole-vaulted its way into the southern language market by signing a memorandum of understanding (MoU) with Asianet Communications Ltd, the company that runs the Malayalam language service the same name. Under the MoU, Zee Telefilms will go in for a share swap with Asianet which will see it acquiring 51 per cent of the latter, effectively gaining control. Asianet will be given Zee Telefilms shares which will give it an equity position of less than 1 per cent in the company.

Zee TV has placed an enterprise value of Rs 4,000 million on Asianet, which means its outgo (in terms of Zee TV equity) to take the 51 per cent stake will be around Rs 2,000 million. Dr Raji Menon, the chairman of Asianet will get a seat on the Zee TV board. Ditto with Zee chairman Subhash Chandra who will hop on to the Asianet board. Asianet's name will not be changed, as it has quite a lot of cachet with its viewing audience.

Under the MoU, Asianet will be the southern language partner for Zee TV and develop content and channels for other southern tongues such as Kannada, Tamil and Telugu. In fact, a Kannada language channel is to be launched in the very near future.

Asianet reportedly has a library of 4,000 hours of programming and 1,200 Malayalam movies. Zee TV is looking at dubbing its software library and pumping it across the four languages. It will also help in the distribution of the channels across its digital bouquets in various countries.

The acquisition of the channels will help Zee TV jumpstart - in fact bulldoze - its way into the southern maket where Sun TV and Eenadu TV have a significant lead . Asianet will continue to be managed on a daily basis by Menon with more and more Zee TV expertise and creative and business talent coming into the company over time.