ZMCL calls off Rs 1592 cr deal with RBNL for purchase of FM radio biz

Zee Media Corporation Ltd (ZMCL) has called off its deal with Anil Ambani-owned Reliance Broadcast Network Ltd (RBNL) for the purchase of the latter’s FM radio business. In November 2016, ZMCL had signed a definitive agreement with RBNL to acquire 49% stake in RBNL’s FM radio business with an option to acquire the balance 51% stake after the three year lock-in period.

“Well you can say technically it is called off because there is no progress,” ZEEL MD Ashok Venkatramani told analysts recently during an earnings conference call.

He further stated that the deal with RBNL did not progress due to delay in securing clearance from the Ministry of Information and Broadcasting (MIB) and ministry of home affairs (MHA. “The period for which the clearance was expected kind of exceeded the initial MoU, so there has been no progress on that,” Venkatramani added.

The companies were expecting the MIB’s approval for the transaction to come by first half of the calendar year 2017.

As per the agreement, RBNL was to transfer 45 operational and 14 new and non-operational licences to newly incorporated special purpose vehicles (SPVs) Vrushvik Entertainment Private Limited (VEPL) and Azalia Media Services Private Limited (AMSPL) respectively through Business Transfer Agreements (BTA). ZMCL was to acquire 49% shares in VEPL and AMSPL.

ZMCL and Reliance Land Private Limited (RLPL) had a call and put option respectively for balance 51% after the expiry of the lock-in period. The call/put option was to be exercised between April 2018 and 2020.

ZMCL CFO Sumit Kapoor said that the company has no immediate plans to launch new channels since it has already covered major parts of India through its existing channels. It has no plans to launch news channels in South India.

“It is only the South region which probably we have not explored into and as we have discussed in past also, there are reasons why we are not really kind of going ahead on that market,” Kapoor said.

He also said that the four licenses that the company received recently were the ones that it had applied for way back in the past and had got these after almost three years. “However, having these licenses, now, with us shall not necessarily mean a launch; we will have to explore how to go about it. We definitely keep exploring business but at this stage, we don’t have a concrete plan to launch,” he noted.

Kapoor further stated that the company is investing in building a technology platform. The total investment is envisaged to be in the range of Rs 20-25 crore.

“We have invested in technology over last one year to strengthen our portfolio and have made decent progress in this direction. The investments hereon are mostly strategic in nature and are being planned towards building up a platform which hopefully will take us through for the next 2-3 years. Thereafter it will be regular maintenance/replacement CAPEX, that any business will require to incur. The same can be envisaged to be in the range of say Rs. 20-25 crore,” he noted.

He also said that all of ZMCL’s national and our regional channels are EBITDA positive barring the three new regional channels and WION which are not EBIDTA positive.

Out of these three new channels, Zee Salaam achieved break even at an operational level in FY18 as well. About Zee UP-UK, Kapoor is hopeful that the channel will become self-sustaining in short term.

For WION, the company has articulated a strategy to take it to a global level which is being executed in phases. “We believe that will all the plans been rolled out effectively, WION shall be able to reach an EBITDA neutral stage in next 18-24 months. This is also because the channel shall be consistently adding to its portfolio new regions it shall be entering over next 12 months and thus, the above timelines seem reasonable,” Kapoor said.