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ZEEL to acquire Anil Ambani’s TV biz; Zee Media to pick up 49% of Big FM

MUMBAI: Subhash Chandra-promoted Zee Entertainment Enterprises Ltd (ZEEL) is set to acquire the general entertainment broadcasting business of Reliance Big Broadcasting, Big Magic Ltd and Azalia Broadcast Pvt Ltd, all part of Anil Ambani’s Reliance Group, through a scheme of demerger and definitive agreements.

In a separate transaction, Ambani’s radio outfit is diluting 49% stake to Chandra’s other company, Zee Media Corporation Ltd (ZMCL). Reliance Broadcast’s FM radio network Big FM will offload 49% to ZMCL.

The transaction

The TV broadcasting business of Reliance Group currently comprises two operational GECs (namely Big Magic and Big Ganga) and four other TV licences.

Big Magic is a comedy channel catering to the Hindi-speaking markets. Big Ganga is a leading Bhojpuri entertainment channel catering to audiences in Bihar, Jharkhand and Purvanchal. The channels are available on all major multi-service operators (MSOs) and direct-to-home (DTH) service providers.

The general entertainment TV broadcasting business undertaking along with its assets, liabilities, licences and trademarks will get demerged from Big Magic Ltd, Reliance Big Broadcasting Pvt Ltd and Azalia Broadcast Pvt Ltd into ZEEL through a court-approved scheme.

Punit GoenkaZEEL MD and CEO Punit Goenka said, “We are pleased to announce this acquisition which further adds to our expanding universe of general entertainment channels. Big Magic gives us access to comedy genre enhancing our customer offerings. Big Ganga, a leading Bhojpuri channel, syncs with our strategy of expanding into the regional markets, which offers attractive growth potential. I am confident that these two channels will make the ZEE Network channels more enriching for the audience and for the company.”

Sam GhoshReliance Capital ED and Group CEO Sam Ghosh said, “We are happy to divest 100% of our general entertainment TV business into Zee Entertainment. This transaction is part of our strategy to reduce exposure in non-core businesses and work towards further reducing debt under Reliance Capital.”

The proposed transaction remains subject to approval of the shareholders and requisite regulatory approvals including stock exchanges, the Ministry of Information & Broadcasting (MIB) and Bombay High Court. The transaction is expected to close in the second half of CY2017.

RBNL business

The radio broadcasting business of the Reliance Group is being operated under Reliance Broadcast Network Ltd (RBNL), which runs the largest network of FM radio channels in India—45 operational licences (issued under Phase II and migrated to Phase III) and 14 new licences (issued under Phase III).

The FM channels are broadcast under the brand name ‘92.7 Big FM’ and reach over 200 million people in 45 cities and 1,200 towns across the country. It has a weekly listener base of around 43 million people and engages with a large number of national and local advertisers.

RBNL will be transferring the 45 operational and 14 new licences into two special-purpose vehicles (SPVs) along with the assets and liabilities. ZMCL will acquire 49% stake in each of these two SPVs.

ZMCL and RBNL will also have a call/put option to acquire/sell the balance 51% after the lock-in provisions after the expiry of the permission holder of these licences. As per MIB regulations, at least 51% shareholding needs to be held by the permission holder for a minimum period of three years from the date the channels were operationalised.

The lock-in period for the 45 operational licences will expire on 31 March 2018, while the lock-in period for the 14 licences will expire after three years from the day the 14 licences have become operational, which is expected to be around March 2020.

ZMCL COO Rajiv SinghZMCL COO Rajiv Singh said, “We are pleased to announce this acquisition which will not only be complementary to our current business but accelerate its growth too. We are currently running successfully a bouquet of 11 news and current affair channels, and with the addition of 59 radio licences, we will be reaching out to a much increased audience base and will keep them engaged on different media platforms. This acquisition will bring about the desired business diversity and help in achieving the sound financial objectives at an accelerated pace. We are confident that this investment will enhance value for all stakeholders and look forward to this exciting journey to take the company to the next level.”

Acquisory Consulting LLP and KPMG are acting as financial/tax advisors to ZEEL and ZMCL. Luthra & Luthra Law Offices is acting as the legal advisor. EY and Phoenix Legal are acting as financial and legal advisors respectively to RBNL.