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Anil Ambani’s Reliance Group to sell TV, radio businesses to Zee Group

23 November, 2016

Billionaire Anil Ambani-led Reliance Capital Ltd said on Wednesday it will sell its radio and television businesses to media baron Subhash Chandra’s Zee Group for Rs 1,900 crore ($283 million) including debt.

The company will use the entire proceeds from the stake sale to cut debt, Reliance Capital said in a statement.

The deal is the latest asset sale by Ambani’s Reliance Group as it strives to reduce borrowings that have crimped growth at the conglomerate which operates in sectors ranging from telecom and financial services to power and defence.

The group’s telecom arm agreed earlier this month to divest its ethernet business to a US company for $28 million and inked a deal last month to sell a majority stake in its tower assets to Canada’s Brookfield Asset Management for $1.65 billion. The group had earlier sold its multiplex business to Carnival Films Pvt Ltd.

The latest deal involves Reliance Broadcast Network Ltd (RBNL), a unit of Reliance Capital, signing a pact with Zee Media Corporation Ltd to sell a 49% stake in its radio broadcast business. Simultaneously, Zee Entertainment Enterprises Ltd will acquire 100% of the Reliance Group’s general entertainment TV business.

The announcement comes months after VCCircle reported in March that the group was looking to exit the radio and TV businesses for Rs 1,500-2,000 crore. 

Reliance Capital also said that the transactions are part of its strategy to reduce exposure in the non-core business of media and entertainment. Both transactions are likely to be completed by next year, subject to approvals, it added.

Transaction Details

RBNL runs the largest network of FM Radio channels in India under the brand name of 92.7 Big FM that reaches out to 45 cities, 1,200 towns and over 200 million people.

The general entertainment TV broadcasting business comprises two channels—Big Magic and Big Ganga. Big Magic is a comedy channel catering to Hindi-speaking markets while Big Ganga is a Bhojpuri entertainment channel catering to audience in Bihar, Jharkhand and Purvanchal. Both these channels will be merged into Zee Entertainment.

“Big Magic gives us access to the comedy genre, enhancing our customer offerings. Big Ganga syncs with our strategy of expanding into the regional markets which offer attractive growth potential,” said Punit Goenka, managing director at Zee Entertainment.

As part of the deal, RBNL will transfer its 45 operational and 14 new channels into two special purpose vehicles and Zee Media will acquire a 49% stake in each of these two SPVs.

RBNL and Zee Media will also have call and put options for the balance 51 % stake in both the SPVs after the stipulated lock-in period.

Audit and consulting firm EY was the financial adviser to RBNL for these transactions.

Other media deals

The deal marks the latest acquisition by Subhash Chandra’s sprawling media empire that is also known as Essel Group.

Two weeks ago, NASDAQ-listed direct-to-home TV company Videocon d2h Ltd announced its merger with Essel Group firm Dish TV Ltd to create the largest Indian listed media firm by revenue.

Dish TV is already the single-largest distributor of television service in India and the new entity–Dish TV Videocon Ltd—will reach one in six television households in the country.

In September, Zee Entertainment entered the radio business with the acquisition of the UAE’s first radio station, Hum 106.2 FM. The deal gives Zee exposure to TV, radio and digital entertainment business in the region.

In another recent media deal, Goldman Sachs-backed cable television distribution company DEN Networks Ltd last week sold an additional 25% stake in the Indian Super League football club Delhi Dynamos to Wall Street Investments Ltd.

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Anil Ambani’s Reliance Group to sell TV, radio businesses to Zee Group

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