Promoters of leading television production company Balaji Telefilms, producer of such long-running popular soaps as Kyunki Saas Bhi Kabhi Bahu Thi and Kahanii Ghar Ghar Kii, have decided to buy back Star TV’s 25.99 per cent stake, which it holds through Asian Broadcasting, for Rs 322 crore or Rs 190 a share.
However, a release sent to the Bombay Stock Exchange says Balaji has to buy the shares within 240 days, failing which Star is entitled to sell its shares to a third party that is not Balaji’s competitor. That apart, a Star-Balaji agreement in April last year to launch general entertainment channels in southern regional languages has also ended.
Consequently, Balaji’s contract with Star — formed in 2004-05 — to produce shows on prime time slots (8-11 pm) exclusively for the channel has not been renewed. No other Hindi general entertainment channel was allowed to air Balaji shows in that prime time band.
The stake sale will ensure that Star TV has virtually doubled its return on investment in four years. Star acquired 21 per cent in Balaji through a preferential allotment by the promoters in 2004 for Rs 123 crore (at around Rs 90 per share). The stake was later increased to 25.99 per cent.
The promoters, actor Jeetendra, his daughter Ekta Kapoor, Shobha Kapoor and Tushar Kapoor, together hold 40.01 per cent in Balaji.
Securities and Exchange Board of India regulations stipulate that the acquisition of Star’s stake by a third party would require an open offer since it exceeds the 15-per-cent trigger.
For 2007-08, Balaji Telefilms recorded a turnover of Rs 378 crore and made a handsome net profit of Rs 96 crore. It makes over 100 serials and shows in various languages throughout the year. Its market capitalisation is Rs 1,125 crore.
Balaji executives declined to explain where the company would raise funds to buy Star’s stake. The end of the exclusivity contract with Star means the production house will be at liberty to produce shows for other channels during prime time.
“In the recent months, Star has replaced Balaji shows with other production shows, thereby reducing the channel’s dependence on Balaji,” said a source in Star.
Star Plus currently airs five shows from the Balaji stable — Kyunki Saas Bhi Kabhi Bahu Thi, Kahanii Ghar Ghar Kii, Kayamat, Kis Des Mein Hai Mera Dil, Kasturi and Karam Apnaa Apnaa.
Several of these sitcoms have been losing out in viewer rating. For instance, Kyunki was the number one entertainment programme last year and has slipped to the 27th rank currently. Kahanii, which was at number two, is down to the 57th rank.
