Providence, Standard Chartered PE in advanced stages of negotiations.
After years of negotiations, the Indian promoters of Multi-Screen Media (MSM) —which runs Sony Television in India — may finally exit the venture.
This is happening at a time when MSM is also closing in to buy out the Ramoji Rao-owned Eenadu TV’s (ETV) bouquet of 11 regional channels for over Rs 2,500 crore, in what would clearly be the largest media deal in recent times.
Multi-Screen Media runs six channels: Sony TV, SET Max, SAB TV, Sony Pix, AXN and Animax. It has a 15 per cent market share in the Hindi general entertainment space.
According to two independent sources, the promoters are in advanced negotiations with two private equity investors, Providence Equity Partners and Standard Chartered Private Equity, to buy them out. These sources said the funds may together make an investment of close to $250 million in MSM for a little over 30 per cent stake, valuing the company between $800 million and close to $1 billion.
The seven Indian promoters, including Singapore-based investment banker Rakesh Agarwal, Shemaroo Films Managing Director Raman Maroo, World Media Group's Sudesh Iyer, actor Jackie Shroff and businessman Sadanand Sule, together own 32 per cent in the broadcaster via their consortium company Atlas Equifin. Sony Pictures owns 61 per cent, while the remaining seven per cent is held by financial institutions.
Sources said talks were still on to see if all the seven investors would exit in one go, but the transaction was likely to see some issuance of fresh equity. The deal is expected to close in a month or two.
However, when contacted, both Raman Maroo and Rakesh Aggarwal did not want to comment on the speculation.
“We keep looking at various alternatives, but cannot comment on the specifics,” Aggarwal told Business Standard. Jackie Shroff was unavailable for comment. MSM said it did not want to comment while Providence did not respond to Business Standard’s queries till the time of going to press.
Sources in the know said though the Indian shareholders had been looking to offload their stake for several years, there were valuation issues. There have been several failed attempts to list the company in India as well, which would have given an exit opportunity to some existing shareholders.
In 2009, MSM failed to clinch a 32 per cent stake sale to BK Modi Group, due to differences over management rights and a lack of clarity on exit options. The deal was then valued around $300 million.
Last year, a battle erupted among various stakeholders, with the minority shareholders filing a petition before the Company Law Board. The board had issued an interim order restraining MSM from raising the paid-up capital of the company. The shareholders had charged majority-owning partner, US-based Sony Pictures Entertainment (SPE), with mismanagement and oppression of minority shareholders. That included opposition to the payment of the controversial facilitation fee of Rs 425 crore to sports management company World Sports Group in March 2009. But with an imminent deal, the outstanding legal issues are likely to get sorted out.
US-based Providence is one of the largest private equity players in the world specialising in investments in media, entertainment, communications and information services companies like Warner Music Group and PanAmSat. Managing a pool of $23 billion, Providence made a big bang entry into India in 2006 by picking up a 15 per cent stake in Idea Cellular for close to Rs 1,800 crore through its investment arm, P5 Asia Investments. Since then, it has been relatively quiet even as earlier this year, it had put in Rs 260 crore in UFO Moviez.
Standard Chartered’s private equity arm has been one of the most proactive funds in India for the last six years, investing close to $600 million. The Asia-focused fund has a broader reach and sweep, with assets under management worth $2.5 billion.
Despite having some of the biggest properties — the Indian Premier League (IPL), Kaun Banega Crorepati and Indian Idol — Sony has been losing market share in the general entertainment channel space. SET Max holds exclusive nine-year telecast rights for the IPL, which is arguably the most lucrative sporting property in the country. Sources said Providence had for long been eyeing an association with the IPL and an investment in MSM would give it that chance.
