Anil Ambani exits TV business

Mumbai, Ending months of speculation, Anil Ambani’s Reliance Capital announced the complete sale of its TV business and partial sale of the radio business under Reliance Broadcast Network Limited (RBNL). While Punit Goenka-led Zee Entertainment Enterprises Limited (ZEEL) will pick the TV business, the news media company Zee Media Corporation Limited (ZMCL) will pick up 49 per cent in the radio business. The total transaction value is estimated to be Rs 1,900 crore ($283 million) which would be used to reduce Reliance Capital’s debt.

The stake sale is part of Reliance Capital’s stated strategy to reduce leverage and exposure in non-core business of media and entertainment. Both these transactions have been approved by the boards of respective companies and are expected to be completed by next year, subject to applicable approvals.

“We are happy to bring in Zee Media as our partner in the Radio business and 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 business of media and entertainment and work towards further reducing our debt under Reliance Capital,” said Sam Ghosh, executive director and group chief executive, Reliance Capital.

 Due to regulatory constraints, ZMCL will currently be able to acquire only 49 per cent in the radio business. Under the radio auction regulations, the lock-in period for a company acquiring frequencies is three years from the date that the last acquired becomes operational. As a result, the lock-in period for the 45 existing frequencies is up to March 31 2018 and the lock-in period for the 14 frequencies acquired in the phase 3 of radio auctions that took place last year, is expected to be up to March 2020.

As a result, RBNL will transfer the 45 operational under an SPV called VEPL and 14 new channels into and SPVcalled AMCL and ZMCL shall acquire 49 per cent stake in each of these two SPVs. Both companies shall also have a call/put option for the balance 51 per cent stake in both the SPVs after the stipulated lock-in period. “We are pleased to announce this partnership 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 transaction 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”, said Rajiv Singh, chief operating officer, Zee Media Corporation.