FM Radio Consolidation: Sun TV Network Buys 48.9% Stake In Red FM
South Indian media group Sun TV Network has bought a 48.9 per cent stake in Red FM, a leading FM radio player in Delhi, Mumbai and Kolkata. South Asia FM Ltd (SAFL), the subsidiary of Sun TV, has picked up the stake.
According to information available with Bombay Stock Exchange, the promoters of Red FM - Usha Reddy, Arjun Rao alongwith NDTV - will continue hold the remaining 51.1 per cent stake in Red FM. In lieu of the 48.9 per cent stake they are selling to SAFL, the Red FM promoters through their investment companies A. H. Multisoft and NDTV News, respectively, would subscribe to 35 per cent of the enlarged equity of SAFL.
SAFL owns 23 FM radio licenses all over India (except the southern states of Tamilnadu, Karnataka, Andhra Pradesh and Kerala), however it has only two operational radio stations at Jaipur and Bhubaneshwar.
Red FM operates three radio stations in Mumbai, Delhi and Kolkata. But it is the number two player in two of the largest FM radio markets in India - Mumbai and Delhi. The deal is synergistic since Red FM gets a national presence, while Sun TV gets presence in three metros. Enam Securities acted as sole advisor to the company for this transaction.
Red FM was earlier owned by Delhi-based India Today Group. In January 2006, they sold the company to a joint venture between Value Labs, Malaysia’s media group Astro, and NDTV News, for a deal reportedly valued at Rs 100 crore ($25 million). It’s not clear if Astro is still an investor in the company.
Private equity fund India Value Fund-owned Radio City and Bennett, Coleman owned Radio Mirchi are the other two strong national players in the radio business, besides Anil Ambani’s Reliance Entertainment-owned BIG FM.
