Bertelsmann in talks for Sahara One stake

Sahara group says exploring ways to raise funds.

Bertelsmann AG, the world's largest private media conglomerate, is in preliminary talks for acquiring a sizeable stake in Subroto Roy-controlled Sahara One Media and Entertainment.

Sources close to the development said a clutch of foreign media companies, including the $21.64-billion German major Bertelsmann, had shown interest in picking up stakes in Sahara One.

When contacted, a spokesperson for the Sahara group said the group was exploring fund-raising options, "but nothing was finalised", he added.

Sources in the industry said the fund-raising exercise, which could eventually witness Bertelsmann entering the country by picking up a stake in the domestic media company, was in step with the restructuring plans of the Sahara group. The group had engaged Ernst & Young to chalk out a restructuring plan.

The restructuring included selling of Air Sahara to Jet Airways for Rs 2,300 crore, sharpening of focus on select businesses and professionalising the family-run group.

"Sahara One has been doing well. It has become financially independent of late. In fact, it has stopped taking financial support from the promoters since January," sources said, adding the group had ambitious plans for its entertainment business, which was being run by the listed entity, Sahara India Mass Communications. Group patriarch Subroto Roy's elder son Sushanto looks after the company.

Sources in the industry said the 170-year-old Bertelsmann's proposed acquisition was in step with its strategy for participating in the domestic broadcasting space.

On a visit to India last year, its Chief Executive Gunter Thielen had said the media conglomerate was exploring opportunities in the country, including investing in media companies, introducing television channels and expanding business process outsourcing operations.

Sahara One would go for other fund-raising options, including a foreign currency convertible bonds issue, in case the deal with Bertelsmann did not materialise, sources added.

Bertelsmann is privately owned by the Mohn family, which controls 75 per cent of a corporation that owns European broadcaster RTL, book publisher Random House, half of Sony BMG and magazine publisher Gruner Jahr.

Sahara One posted net profit of Rs 6.5 crore on a total income of Rs 215 crore in 2004-05. On September 30, 2005, (the latest available from the Bombay Stock Exchange), the promoters hold nearly 96 per cent stake in the company. The stock closed at Rs 378.95 on the BSE on Friday, 2.42 per cent higher than the previous close.