Subash Chandra’s Zee Group is buying the general entertainment channels and FM radio business of the Anil Ambani group.
Because of lock-in provisions, the acquisition of 59 FM radio licenses will be done in two stages.
The FM channels are being broadcast under the brand “92.7 BIG FM”, reaching to 45 cities, 1200 towns and over 200 million people.
It reaches out to around 43 million listeners per week and engages with a large number of national and local advertisers.
Reliance Broadcast Network Limited shall be transferring the 45 operational and 14 new licenses into two SPVs respectively along with the assets and liabilities. Zee Media Corp — the news wing of the Zee group — shall acquire 49% stake in each of these two special purpose vehicle.
Zee Media will also have the right to buy the remaining 51% stake after the lock-in provisions expire.
As per government of India regulations, at least 51% shareholding needs to be held by the permission holder for a minimum period of 3 years from the date the channels were operationalized.
“The lock-in period for the 45 operational licenses shall expire on 31st March 2018, whilst the lock-in period for the 14 licenses shall expire after the expiry of 3 years from the day all 14 licenses shall have become operational, which is expected to be around March 2020,” Zee Media said.
Rajiv Singh, COO, ZMCL said “We are pleased to announce this acquisition which shall not only be complementary to our current business but accelerate its growth too. We are currently running successfully a bouquet of 11 news and current affair channels and with the addition of 59 radio licenses, we will be reaching out to a much increased audience base and will keep them engaged on different media platforms. This acquisition shall bring about the desired business diversity and will help in achieving the sound financial objectives at an accelerated pace. We are confident that this investment will enhance value for all stakeholders and looking forward towards this exciting journey to take the company to the next level.”
Sam Ghosh, ED and Group CEO, Reliance Capital said, “We are happy to bring in Zee Media as our partner in the Radio business. This transaction is part of our strategy to reduce exposure in non-core businesses and work towards further reducing debt under Reliance Capital”.
The transaction is expected to close in the first half of CY2017.
92.7 BIG FM, launched in 2006, is India’s largest and No.1 radio network spanning 45 markets. With an increased presence of 59 stations with newly acquired frequencies in key states of Maharashtra, Uttar Pradesh, Bihar and Northeast India, the radio network consolidates its position to be the largest in the country.
The Zee Group is also buying two entertainment channels from the Anil Ambani Group (Reliance Capital.)
These will be acquired via Zee Entertainment Enterprises.
The TV Broadcasting business of Reliance Group Entities currently comprises two operational general entertainment channels — BIG Magic and BIG Ganga — and 4 other TV licenses.
BIG Magic is a Comedy channel catering to Hindi Speaking Markets. BIG Ganga is a leading Bhojpuri entertainment channel catering to audiences in Bihar, Jharkhand and Purvanchal.
The channels are available on all major MSOs and DTH operators.
“The General Entertainment TV Broadcasting business undertaking along with its assets, liabilities, licenses, trademarks etc. shall get demerged from “BIG Magic Ltd”, “Reliance Big Broadcasting Private Ltd” and “Azalia Broadcast Private Ltd” into ZEEL through a court approved scheme,” the company said.
Punit Goenka, MD & CEO, ZEEL said, “We are pleased to announce this acquisition which further adds to our expanding universe of general entertainment channels. BIG Magic gives us access to comedy genre enhancing our customer offerings. BIG Ganga, a leading Bhojpuri channel syncs with our strategy of expanding into the regional markets which offers attractive growth potential. I am confident that these two channels will make the ZEE Network channels more enriching for the audience and for the Company.”
Sam Ghosh, ED and Group CEO, Reliance Capital said, “We are happy to divest 100 per cent of our general entertainment TV business to Zee Entertainment. This transaction is part of our strategy to reduce exposure in non-core businesses and work towards further reducing debt under Reliance Capital.”
The Anil Ambani group, which operates the Reliance Communications telecom operator, is in the midst of an effort to cut down debt. It is in the process of selling its tower assets and real estate. This move too is expected to help it bring its balance sheet into proper shape after a series of spectrum auctions forced the company to take on tens of thousands of crores of debt.
The transaction is expected to close in the second half of next calendar year. Acquisory Consulting LLP and KPMG are acting as financial and tax advisors to ZEEL and the fairness opinion has been provided by IDBI Capital Markets.