ICRA has reaffirmed the A+ rating assigned to the Rs 800 million (enhanced from Rs 170 million), long-term loans and the Rs 500 million (reduced from Rs 600 million), long-term, fund-based bank facilities of Zee Media Corporation. The rating continues to be on rating watch with negative implications. 

The rating reaffirmation takes into account the soon to be concluded merger of Essel Publishers (EPPL) with ZMCL, which is expected to result in deterioration of the currently comfortable financial profile of ZMCL. 

The rating continues to factor in ZMCL's position as the largest news network in the country; strong recognition of the Zee brand proving to be a competitive edge for ZMCL through leveraging this network strength; increasing subscription revenues, thereby lowering ZMCL's dependence on advertisement revenues; and the strong promoter and management profile of the Essel group.

The rating also takes into account ZMCL's heavy dependence on a single channel - Zee News; high competitive intensity in the news broadcasting space raising concerns on the further scalability of ZMCL's news operations so as to enable operating synergies; and ZMCL's exposure to its group companies by way of loans and advances lent to them, resulting in significant funds blockage. 

ICRA also notes the moderation in revenue growth and margins for ZMCL on the back of increased cost pressures and opex related to four new channels launched in the past one year. While the pressure on margins would continue to persist till the time the new channel launches achieve breakeven, the merger of EPPL with ZMCL is expected to result in further compression in margins. ICRA will continue to monitor the developments in this regard and assess the outcome on ZMCL's credit profile once the merger gets concluded. 

Shares of the company declined Rs 0.22, or 1.54%, to trade at Rs 14.10. The total volume of shares traded was 132,424 at the BSE (3.32 p.m., Friday).