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Why Zee acquiring stake in RBNL makes sense

29-February-2016
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Why Zee acquiring stake in RBNL makes sense

Talks between Subhash Chandra owned Zee and Anil Ambani’s RBNL, have been doing the rounds in the market and is currently the hot topic of much discussion and debate more so in the last few days.

It is also known that Ambani has been looking to off load his stake in the media business since awhile now.

The RBNL group’s radio business 92.7 FM seems like a great fitment to Zee. Industry sources indicate that Zee has been wanting to get into the radio business, and tried to acquire Radio City as well last year which was finally acquired by the Jagran Group. 

92.7 BIG FM is estimated to have an EBIDTA growth of over 70% (FY16 vs FY15) and an estimated topline growth of 33% (FY16 vs FY15).

 Referring to RAM data of the past one year (Wk1 2015 – Wk7 2016) 92.7 BIG FM has been the No. 1 radio station in Mumbai for most weeks.

Post the phase 3 auctions the radio business now has a larger footprint from the earlier 45 frequencies, in addition to 14 new frequencies and 2 tie ups take the offering to advertisers of 61 cities which is no mean number for Zee and only adds to its volume offering to advertisers .

Big FM's network now covers all 4 ‘A+’ category towns, 7 out of 9 ‘A’ category towns and 12 out of 17 ‘B’ category towns.

Coming to the TV side of the business RBNL‘s Big Ganga is estimated to have significant market share estimated to be around 30% in the Bihar & Jharkhand  belt, which would help Zee in the region.

Amid much speculation in the market on RBNL selling stake (the exact number remains speculative) to Zee, we reached out to Tarun Katial, Chief Executive Officer, RBNL. To clarify the on-going speculation. 

“We are running a process and this is a long process I am personally not aware what the shortlists of the process are” said Katial.

The process is estimated to have been initiated around 3 months ago and is being handled by EY, (the firm was earlier known as Ernst & Young)

The estimated valuation of 92.7 Big FM is said to be at Rs.2,500 crore.

Zee did not comment on the query sent to them.

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