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Radio Mirchi to acquire TV Today’s radio biz
MUMBAI: Entertainment Network India Ltd (ENIL), which owns Radio Mirchi FM channel, has agreed to buy out TV Today Network’s radio business.
Both the companies have entered into an agreement to this effect. TV Today Network owns and operates FM radio station Oye 104.8.
TelevisionPost.com was the first to report that ENIL was in talks to acquire Oye FM.
The companies have now entered into a non-binding memorandum of understanding in relation to the proposed sale.
“The committee of senior officials at a meeting held on 13 February noted that the company had entered into a non-binding memorandum of understanding with ENIL, in relation to the proposed sale of seven radio stations,” TV Today Network said.
The deal is subject to fulfilment of the contractual obligations (which may be agreed between the parties) and receipt of all necessary regulatory approvals including permissions from the Ministry of Information and Broadcasting, Government of India.
The acquisition will be a strategic fit for Radio Mirchi to strengthen its presence further in the metros with overlapping stations. Oye FM has radio stations in seven cities including Delhi, Kolkata, Amritsar, Mumbai, Jodhpur and Patiala.
The common cities where both have presence are Delhi, Mumbai, Kolkata, which are all metros where the new licences of Phase III are limitedly available. The deal will also give Radio Mirchi an entry into cities like Amritsar, Jodhpur, and Patiala where it was absent until now.
In a recent interaction with TelevisionPost.com, ENIL MD and CEO Prashant Panday stated that they were looking to expand their current strength of 32 stations through the acquisition route and were in talks with multiple radio players to explore acquisition deals.
This is the second major deal in FM radio broadcasting ahead of the FM Phase III auctions. In December last year, print media major Jagran Prakashan (JPL) had acquired Music Broadcast, which operates Radio City FM stations.
Radio Mirchi is a market leader in the FM radio space and has capital to take the acquisition route. According to a source, it was in talks to acquire Radio City but the deal could not conclude due to valuations.
Radio Mirchi reported revenue of Rs 384.8 crore (Rs 3.85 billion) in 2013–2014. In Q3 FY15, the company posted a net profit growth of 27 per cent on a revenue of Rs 117 crore (Rs 1.17 billion).
Commencing operations in May 2007, Oye FM has had a mixed journey in the FM broadcasting space. Originally launched as Meow FM, the channel primarily catered to women through talk-based shows. The strategy did not work for the channel and it went into loss, resulting in the network turning it into a Bollywood station Oye FM.
However, even after the repositioning, the fortunes did not change and Oye FM continued to generate losses year-on-year. For the fiscal ended 31 March 2014, it suffered a loss of Rs 11.23 crore (Rs 112.3 million) on revenue of Rs 15.38 crore (Rs 153.8 million).
In Q3 FY15, Oye FM registered revenue of Rs 4 crore (Rs 40 million) while loss from the segment stood at Rs 1.93 crore (Rs 19.3 million).
For a radio business with seven stations and a huge loss, the pay-up of migration fees for renewal of licences and bidding can be difficult as all the money has to be paid in advance. Thus, the easiest route for players before the auctions is to take the exit route.
Meanwhile, for a player like Radio Mirchi, which has sufficient cash flows, acquisition of a seven-station network fits well into their scheme of things. The acquisition of Radio City, however, would have given it a bigger scale. But Jagran’s acquisition of Radio City has come at a much higher value, media analysts said.
Radio City operates 20 stations across seven states. MBPL’s consolidated revenue for FY14 was at Rs 161.8 crore (Rs 1.62 billion). In the first half of FY15, its revenue stood at Rs 97.1 crore (Rs 971 million).
Jagran promoters own Radio Mantra, which has presence in eight cities (Jalandhar, Agra, Bareilly, Gorakhpur, Hisar, Karnal, Ranchi and Varanasi) across UP, Haryana, Punjab and Jharkhand where Radio City does not have any presence.