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Turner deal dilutes NDTV’s presence in entertainment biz

09-December-2009
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Turner deal dilutes NDTV’s presence in entertainment biz

Whether it was the success of Colors, just the sheer mood of the Indian market or the fact that Hindi general entertainment is where the future is, Turner’s intentions to dabble strongly in the Indian Hindi GEC space is clearer with the recently announced deal between Turner Asia Pacific Ventures and NDTV Networks.

Putting to rest months of speculation, NDTV informed the Bombay Stock Exchange on December 8, 2009, that subject to approval from the Time Warner Board, NDTV would enter a deal with Turner APAC Ventures, wherein Turner would acquire 76 per cent of NDTV Imagine for a sum of $67 million. In addition to this, Turner would be ploughing in $50 million for subscription to fresh shares. As is known, NDTV Imagine also has some minority shareholding from the likes of Karan Johar and the management of NDTV Imagine, among others.

It is understood that Turner would also be buying out the stake of some of these minority shareholders in Imagine. The combined result of these efforts would take Turner’s control of NDTV Imagine to well over 90 per cent. Once the deal is through, Turner would then be directly investing in NDTV Imagine. This significantly reduces NDTV’s presence in the entertainment business.

According to NDTV Networks’ CEO, Vikram Chandra, the activities that the company had undertaken in the last two months, now made NDTV a “cash-rich and debt-free company”.

The four-point plan

Chandra reemphasised that NDTV had been clear from the start that in the general entertainment space, it would do well with a strong international strategic partner who would bring in global expertise and give access to global capital to the company as well.

Evidently for the company, this thought process didn’t change in the course of the last two years. The NBC Universal deal signed in January 2008 was in line with this thought. The precise reasons of why NBCU exited the NDTV deal are not clear, but as the global economic conditions changed, there were market conversation that NBC would not be able to invest in Imagine in the manner that was required. Market observers informed that the second dilemma in front of NDTV at the same time was also that the bonds were coming up for a repurchase in May 2010. The nature of these bonds also was such that it made it difficult to raise additional capital.

The clear four-point plan that NDTV seems to have taken in the last two months included first the buying back of shares from NBC Universal. Following this, NDTV took out the bonds from the picture – it is understood that NDTV would have had to pay $107 million and accrued interest to purchase these bonds, but the company closed that part of the deal for a sum of $72.4 million, including accrued interest.

The third part of the plan included the lifestyle side of the business, wherein NDTV entered into a partnership with Scripps in that space. And the final piece was the Turner-NDTV deal.

Debt-free and Cash Rich

Commenting on the overall scene, Chandra said, “At the end of these two months, at a consolidated level, NDTV will be a debt-free and a cash rich company. Two of our companies – Imagine and Lifestyle – now have global partners who are best in the world and bring global expertise and access to global capital.”

Chandra looks back at the last two months with satisfaction – at present, the NDTV Network’s spread has NDTV Convergence; a 50:50 JV with Genpact for NGEN; and a 31 per cent shareholding in the lifestyle business with Scripps.

The company’s ambitions in the entertainment business do seem to have taken a backseat for now. All eyes are now on Turner and what can be expected from Imagine following this new partnership, which also brings in an influx of funds.

NDTV Imagine has three entertainment properties in its ambit --- Hindi GEC NDTV Imagine, NDTV Lumiere and Imagine Showbiz. How Turner’s presence impacts the latter two channels, is still not known. Some of the other details on how the company name changes, whether any channel’s name or the look and feel would change to mark a new parent company, will also get clearer over the next couple of weeks.

Still a Wait and Watch

The industry is on a wait and watch mode on what Turner’s relation with Imagine would mean for the company. Sam Balsara, Chairman, Madison World, observed, “Turner’s interest in the Hindi general entertainment domain in India is understandable. I hope that this development can bring in enthusiasm, freshness both in resources and the energy in the company and scale up NDTV Imagine’s offering further.”

Lynn de Souza, Chairman and CEO, Lintas Media Group, on the other hand said, “Investments is only one part. There is a lot more that is required for a media company, or any company, to be successful and make its mark.”

There are various viewpoints on Turner’s presence in the venture. One school of thought is that Turner is one of the first companies to have explored the Indian market through its ventures in the kids’ broadcasting domain and also on the distribution side with its JV with Zee Group. This, alongside Turner’s track record and other activities in India, makes it a strong partner for Imagine.

However, media observers also state Turner had not taken the bigger steps until now. The Alva Turner JV channel Real is on a hold too. How this development merits Imagine, is still a wait and watch.

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