Entertainment Network (India) Ltd or ENIL, the only prominent public listed firm controlled by the media behemoth Bennett Coleman & Co Ltd (BCCL), is buying TV Today Network's Oye FM and its seven radio stations for an undisclosed amount, it said on Friday.
ENIL already owns Radio Mirchi, the largest private FM radio operator in the country.
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.
For BCCL, this would mark fresh inorganic move in the radio space after an unsuccessful and expensive acquisition of Virgin Radio in the UK.
In July 2013 it had entered into a deal with Bauer Media Group to sell Absolute Radio (erstwhile Virgin Radio). Although the deal value was not disclosed, it was pegged at around £22 million ($33.5 million or Rs 204 crore then). This meant BCCL exited the firm at about half of what it spent to buy it.
In mid-2008 the Indian media group had paid around £53.2 million (Rs 445 crore or $100 million back then) to acquire Virgin Radio. It had struggled to generate financial value for BCCL.
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.