MUMBAI: After months of speculations and on-again-off-again talks, Anil Ambani-owned Reliance CapitalBSE -2.25 % and Subhash Chandra-owned Zee Group have finally announced the deal wherein the latter will take over the radio and television business housed under Reliance Broadcast Networks Ltd (RBNL).
ET was first to report that Zee Group has reached an agreement to acquire RBNL for an enterprise value of Rs 1,872 crore.
In a statement, Reliance Capital, the investment arm of Anil Ambani-led Reliance Group, announced “value-unlocking” in the radio and TV businesses that will reduce the company’s debt by approx. Rs 1,900 crore ($ 283 million) upon final completion of stake sale transactions.
“This transaction is part of our strategy to reduce exposure in a non-core business of media and entertainment and work towards further reducing our debt under Reliance Capital,” said Sam Ghosh, Group CEO of Reliance Capital.
As per the deal, Zee Media Corporation, which houses the news channels of the group, will acquire 49% stake in BIG FM, which operates 45 operational licenses (issued under Phase II and migrated to Phase III) and 14 new licenses (issued under Phase III).
RBNL will transfer the licenses into two SPVs along with the assets and liabilities. Zee Media will acquire 49% stake in each of these two SPVs and both the companies will have the option to acquire/sell the remaining 51% after the lock-in provisions on the permission holder of these licenses expire.
As per MIB 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 operationalised. 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. This lock-in period was one of the hurdles between the two parties.
“We are pleased to announce this partnership which shall not only be complementary to our current business but accelerate its growth too,” said Rajiv Singh, COO, Zee Media Corporation. “This transaction shall bring about the desired business diversity and will help in achieving the sound financial objectives at an accelerated pace.”
The deal also includes Zee Entertainment Enterprises Ltd (ZEEL), which houses the national and regional entertainment channel of the Zee group, acquiring 100% stake in Reliance’s general entertainment TV business – Reliance Big Broadcasting Private Limited, Big Magic Limited & Azalia Broadcast Private Limited. RBNL’s TV business include operational channels – BIG Magic (Hindi) and BIG Ganga (Bhojpuri) – and four TV licenses.
“This acquisition further adds to our expanding universe of general entertainment channels. Big Magic gives us access to comedy genre enhancing our customer offerings. Big Ganga syncs with our strategy of expanding into the regional markets which offer attractive growth potential,” added Punit Goenka, MD, ZEEL.
