MUMBAI: Flushed with cash from the sale of sports business to Sony Pictures Networks India (SPNI), Zee Entertainment Enterprises Limited (ZEEL) has entered into a definitive agreement to acquire 9X Media and INX Music from New Silk Route and other shareholders for an all cash consideration of Rs 160 crore.
9X Media, along with its subsidiaries, operates a bouquet of six music channels – 9XM (Latest Bollywood), 9X Jalwa (Evergreen Hindi), 9X Jhakaas (Marathi), 9X Tashan (Punjabi), 9XO (English), 9X Bajao (Hindi Classics).
The company operates its Punjabi music channel 9X Tashan through a joint venture. Sandeep Bansal, who grew up as a cable TV operator, has a 34% stake in the JV. With ZEEL taking over the entire business, the JV will get dismantled.
As part of the acquisition, the company will acquire 91.45 million shares of Rs 10 each for a total consideration of Rs 155.2 crore. It will also acquire 29.15% stake in INX Music for Rs 4.8 crore.
Post the acquisition, INX Music will also become a subsidiary of the company since 9X Media holds 70.85% stake in the company.
9X Media and INX Music had reported consolidated revenue of Rs 158.6 crore in FY17 on a negative EBITDA of Rs 5.1 crore. In FY16, the consolidated EBITDA was Rs 11.7 crore while the revenue was Rs 176.2 crore. In FY15, the companies had reported EBITDA loss of Rs 10.4 crore on revenue of Rs 148 crore.
The acquisition is expected to be completed in 60 days as no government approvals are required.
The deal will provide exit to private equity firm New Silk Route (NSR), which owns close to 80% stake in 9X Media.
On completion of the acquisition, these channels will be added to ZEEL’s current portfolio of 33 channels. The acquisition is in line with the company’s strategy to cater to diverse audience by offering targeted products.
Besides significantly expanding its Hindi music portfolio, it gives ZEEL access to the regional music genre. It also increases its regional footprint with foray into the Punjabi market.
9X Media’s bouquet of channels have established a strong viewership on the back of the unique brand identity created over the years.
In addition to strengthening ZEEL’s television bouquet, these channels will complement the music label and movie production businesses. 9X Media’s popular Bollywood news portal, SpotboyE, will also be a part of the transaction.
The company said it is confident of utilising network synergies to bring down the costs and significantly improve the profitability of these channels.
ZEEL MD and CEO Punit Goenka said, “Continuing with our strategy of expanding into regional markets and niche genres, we are pleased to announce this acquisition which strengthens our music portfolio. Music is an integral component of consumer’s entertainment pie and we will offer our consumers a wider array of choices through these channels. 9X channels enjoy leading market shares in their respective segments and will benefit immensely from our network’s strength to achieve higher growth potential and cost synergies. I am confident that these channels will make our entertainment bouquet even more compelling for the audience.”
ZEEL had recently concluded the sale of its sports business to Sony Pictures Networks India for a total consideration of $366.32 million.
The company has been on an acquisition spree. In November 2016, it had acquired Reliance Broadcast Networks Ltd’s (RBNL) for a consideration of Rs 298.4 crore. The deal gave ZEEL ownership of two entertainment channels, Big Magic and Big Ganga, and four additional TV channel licences.
In 2015, it had acquired Odia GEC Sarthak TV from Sarthak Entertainment for Rs 115 crore (Rs 1.15 billion). The all-cash deal includes Rs 15 crore (Rs 150 million) payable in financial year 2017 and 2018, linked to certain performance milestones of the channel.