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Jagran promoters to merge Radio Mantra with Radio City
MUMBAI: Radio Mantra, which is owned by the promoters of Jagran Prakashan Ltd (JPL), will be merged with Radio City’s holding company Music Broadcast Pvt Ltd (MBPL).
As per company sources, the merger of Radio Mantra with Radio City is expected to be executed through share swap. JPL board will meet soon to formally approve the proposal.
Radio Mantra, which has presence in the eight cities of Jalandhar, Agra, Bareilly, Gorakhpur, Hisar, Karnal, Ranchi and Varanasi, would be valued lower than Radio City. Trade experts are expecting a valuation of Rs 50 crore (Rs 500 million) for Radio Mantra. JPL had acquired MBPL in an all-cash deal for Rs 434 crore (Rs 4.34 billion).
Radio Mantra’s revenue from the eight stations for the last fiscal was about Rs 22 crore (Rs 220 million), while operating profit was at Rs 6 crore (Rs 60 million).
Following the merger, the operating profit of the radio network could double with strong synergies from Radio City.
TelevisionPost.com had earlier reported that JPL would explore the possibility of consolidation of the two businesses as the combined network would create a ‘compelling proposition’ for advertisers in core Jagran markets.
During the recently concluded FM Phase III auctions (first batch), MBPL remained focused on Tier II markets and acquired 11 frequencies in the auctions for Rs 62.6 crore (Rs 625.7 million).
The company was planning to acquire 13 stations but refrained from it due to the escalating cost of the bid. While the migration expense is expected to be around Rs 200 crore (Rs 2 billion), the company expects an additional capex of Rs 15 crore (Rs 150 million).
“Radio City and Radio Mantra together will be dominant players in important state clusters and continue our successful Phase II strategy of concentrating on advertiser-relevant markets,” Radio City CEO Apurva Purohit had earlier stated.
MBPL had posted revenue of Rs 209.4 crore (Rs 2.09 billion) in FY15, marking a growth of 30 per cent over the previous year. Its operating margin for the fiscal stood at 31 per cent, while net profit was at Rs 43 crore (Rs 430 million), up 100 per cent over the previous year.