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Jagran to acquire Radio City

MUMBAI: Jagran Prakashan Ltd (JPL) has agreed to acquire Radio City, a move that will enable the print major to enter into the FM radio business ahead of the Phase III auctions.

Radio City is held by private equity fund India Value Fund Advisors (IVFA) and operates in 20 stations in seven states across India.

The board of JPL has approved the acquisition of Music Broadcast Private Ltd (MBPL), the company that operates Radio City. As part of the acquisition, the company will also acquire MBPL’s holding company and fellow subsidiary Radio City Connect that provides activations.

Following the acquisition, JPL will get ownership of the entire business, along with its management team led by its CEO Apurva Purohit. JPL will then induct its own members onto the board.

The acquisition will be through an all-cash deal and is subject to regulatory approvals, including that of the Ministry of Information and Broadcasting (MIB).

Through this purchase, JPL forays into the high-growth radio media segment which is increasing its share of advertising expenditure in India.

JPL said that the deal will be funded through internal accruals and investments, and will not impair the company’s ability to distribute dividends. While the value of the deal is undisclosed, the company said that the investment is partly for purchase of equity and partly for replacement of loans of sellers.

JPL CMD Mahendra Mohan Gupta said, “The radio business has witnessed significant growth in the recent past and is expected to grow at over 18 per cent CAGR in the coming years, as per KPMG FICCI. This deal will catapult JPL into a leadership position in the radio industry and enable the company to benefit from the rapid growth in radio advertising. The acquisition of Radio City further consolidates our position as India’s leading media and communications group. The radio business will complement our print, outdoor, activation and digital businesses and enable deeper inroads with advertisers both at national and local level.”

In a separate statement, Purohit said, “This [deal] augurs well for all the stakeholders. Both Jagran and Radio City have been pioneers and leaders in their respective space and this partnership will help augment the growth aspirations of the brand. We look forward to exciting times ahead.”

Radio City has a national footprint, with a presence in the top 14 out of 16 advertisement revenue-generating markets with a focus on SEC AB audiences.

MBPL’s total revenues in FY14 were at Rs 161.8 crore (Rs 1.62 billion). In the first half of FY15 its revenues stood at Rs 97.1 crore (Rs 971 million).

While its advertising revenues have exhibited a healthy growth of 28 per cent in H1, its operating margins stood at 28 per cent.

With the FM radio Phase III auctions looming, JPL said that the Phase III migration fee payable for existing stations is limited to a cap.

Set up in 2001, Radio City is India’s first 24-hour private FM station by MBPL in Bengaluru. IVF acquired a majority stake in the promoter company in 2005 and helped in acquiring 16 additional licences.

The radio network reaches to approximately 66 million people across 20 cities, covering almost 51 per cent of the total radio population. It also owns own 14 revenue-generating online radio stations, PlanetRadioCity.com.

Its on-ground division Radio City Connect is engaged in activations including mobile road shows, multi-city mall activities, RWA activities, school/college promotions, rock shows, and movie and music promotions.

Also read:

Why is Jagran Prakashan acquiring Radio City?