The Ministry of Information and Broadcasting (MIB) has struck down the deal under which Entertainment Network (India) Ltd or ENIL had agreed to acquire TV Today Network Ltd's Oye FM, on the grounds that the proposed deal is not in conformity with FM radio guidelines.
ENIL, the only prominent public listed firm controlled by media behemoth Bennett Coleman & Co Ltd (BCCL), and TV Today Network have now decided to appeal against the MIB's decision, they said on Monday.
One of the issues is migration/renewal of Oye FM from Phase II to Phase III of FM auctions. Firms are to pay a migration fee for the same. It had filed its application but an approval was pending.
TV Today had previously filed a writ petition in the Delhi High Court to expedite the approval process from MIB to see through the deal with ENIL. However, MIB had indicated that the non-refundable one-time migration fee would not be notified for Oye FM since the previous application for sale of the business was not disposed of.
It had agreed to dispose the application within two weeks of the last court hearing dated April 20.
Although the writ petition was dismissed, the next court hearing was scheduled for May 14 for compliance.
TV Today has now approved an amendment to the non-binding agreement with ENIL. Signed in February this year, it entailed ENIL acquiring Oye FM and its seven radio stations for an undisclosed amount.
ENIL already owns Radio Mirchi, the largest private FM radio operator in the country with presence in 32 cities, including Mumbai, Delhi and Kolkata.
Cash rich BCCL or Times Group is a publisher of newspapers such as The Times of India and The Economic Times, besides several other print publications and TV channels such as Times Now, Movies Now and other digital and electronic media properties.
TV Today, which operates radio FM channels under the Oye brand, has been facing cost pressures given the high royalty payments, one time entry fee and restrictions on networking. It ended FY14 with revenues of Rs 15.37 crore with segment loss of Rs 11.2 crore. It managed to improve the performance by cutting losses and increasing revenues almost 50 per cent over FY13.
But the radio business has been a laggard for the firm whose TV broadcasting business commands high margins.
In contrast, ENIL has been on a fast growth path. ENIL, which essentially derives all its business from Radio Mirchi, saw revenues climb to Rs 407 crore with net profit of Rs 83.4 crore in FY14.
The new policy allows FM operators to buy second and even third FM radio frequencies in the same market besides looking at M&As. This has opened up the market for consolidation.
In December, Blackstone-backed Jagran Prakashan had acquired Radio City, which has 20 stations in seven states.
