Anil Ambani has found a buyer for Reliance Broadcast Network NSE -0.07 % (RBN), which operates the Big FM radio channels, with Jagran PrakashanNSE 2.65 % set to purchase the company valuing it at close to Rs 1,200 crore, people with direct knowledge of the matter said. An announcement is expected as early as Monday, said one of the people.
The offer from the publisher of Hindi newspaper Dainik Jagran comes after an earlier deal with the Zee Group fell through due to a delay in getting government approvals. The sale will come handy for Ambani who is looking to raise Rs 12,000 crore by selling non-core businesses to reduce debt. Recently, Reliance Capital, the investment arm of his Reliance Group, signed an agreement with Nippon Life to sell its stake in Reliance Mutual Fund for around Rs 6,000 crore.
Mahendra Mohan Gupta’s Jagran Prakashan had in December 2014 acquired Music Broadcast Ltd (MBL), which owns FM channel Radio City, in an all-cash deal. It will acquire RBN through MBL.
“RBN and MBL have reached an agreement … MBL will first pick up 24% in RBN, which does not require any permission,” said one of the people.
Anil Ambani’s Reliance Group and Jagran Prakashan didn’t respond to emails seeking comment till press time Sunday.
Big FM has 59 FM stations, while MBL has 39 stations under the Radio City brand. RBN will transfer the control of 45 stations to MBL once the approvals are in, and the remaining 14 once their lock-in period expires in 2020, a second person said. “The deal will make Radio City India’s largest private FM company.”
As per government guidelines, a radio company cannot sell majority stake in a new licence for three years. The lock-in period for Big FM’s 45 stations expired on March 31 last year, whereas for the remaining 14, it will be effective till March 2020. MBL is also in the process of acquiring Friends FM in Kolkata; the deal is awaiting the government’s approval.
Jagran Prakashan’s offer values RBN cheaper than Zee’s Rs 1,872 crore deal, which also covered the TV channels — Big Magic and Big Ganga — operated by the Reliance Group company. An RBN executive said the new valuation also accounted for the period remaining under the FM licences, which has come down with time.
“The Zee deal was signed in 2016, at that time value of the radio business was higher. But overall, value has not eroded,” he said.
EY India is the financial adviser to the transaction for RBN.
ET had reported about on-again, off-again talks between RBN and Zee. The 2016 deal between Zee and RBN was structured in two parts. While the two television channels were acquired by Zee for Rs 300 crore, Zee Media Corp, which housed the news channels of the group, was to initially take a 49% stake in the FM radio business. Zee also had the option to buy the remaining 51% after the three-year lock-in period ended for the licences. But, the two sides dropped the deal for the FM channels.
RBN’S JOURNEY
Anil Ambani’s tryst with the media and entertainment business started in 2005, when his group acquired a controlling stake in Adlabs Films, the entertainment and multiplex company promoted by Manmohan Shetty and Vasanji Mamania.
A year later, his group bought out Shetty’s stake also to take full control of the company and launched its radio business, Big FM. Later, the radio and TV businesses were demerged into a separate company, which was listed on bourses as Reliance MediaWorld in 2009.
Subsequently, the company added television business to its portfolio and changed the name to Reliance Broadcast Networks.
In October 2013, RBN got board approval to delist and by fiscal 2016, it started looking for a buyer.
Source: Economic Times