Entertainment Network (India) Ltd (ENIL) has received Ministry of Information and Broadcasting's (MIB's) approval to buy four radio stations operated by TV Today Network Ltd (TVTN) under the Oye FM brand in Amritsar, Jodhpur, Patiala and Shimla, the company said in a stock market disclosure.
The deal amount is remained undisclosed and is subject to various approvals.
This marks a partial green signal after MIB had nixed the proposal to buy seven radio stations by ENIL, which runs the country's top private radio FM network under the Radio Mirchi brand.
The proposal was facing roadblocks 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 had said they will appeal against the MIB's decision.
The sale of remaining three radio stations at Delhi, Mumbai and Kolkata, has not been approved since ENIL can't hold more than one radio license in a particular city, TVTN said in a separate disclosure. Radio Mirchi is present 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.
Shares of TVTN were last traded at Rs 228.10 each, up 6.89 per cent while ENIL's scrip closed at Rs 815.05, up 12.13 per cent on BSE in a strong Mumbai market on Wednesday.
TV Today 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.