A joint venture between Hyderabad-based information technology service provider Value Labs, TV news network NDTV and Malaysian media company Astro have bought all three radio licences of the Living Media group for an estimated sum of Rs 100 crore.
NEW DELHI: A joint venture between Hyderabad-based information technology service provider Value Labs, TV news network NDTV and Malaysian media company Astro have bought all three radio licences of the Living Media group for an estimated sum of Rs 100 crore.
Living Media held FM radio licences in Delhi, Mumbai and Kolkata under the brand name ‘Red FM’.
Value Labs is the largest shareholder in the new joint venture with over 50% stake, NDTV is the minority Indian partner with around 20 to 30%, while Astro holds around 20%.
Only up to 20% FDI is permitted in any radio venture in the country. DNA Money had reported in the issue dated December 16 that Astro had emerged a frontrunner for picking up a stake in the Radio Today (Living Media’s radio entity) venture.
While Living Media has sold its existing licences, the group is not exiting the radio business, according to Anil Mehra, the company CFO. It is likely to participate in the second phase of FM privatisation, financial bidding for which starts on January 6.
The company, under the name Radio Today Broadcasting Ltd, already has government approval for its technical bids in FM-II. It’s planning to submit financial bids for 15 to 18 citiestowns in FM-II. From the licence fee regime in FM-I, it will be a shift to a 4 per cent revenue-sharing era during FM-II.
The company is learnt to have run significant losses in the radio business, around 60 crore to 70 crore, over the past couple of years because of the steep licence fee regime.
That’s perhaps one of the reasons for its decision to sell the existing licences in three cities. “We are not ready to migrate from phase one to two under the current formula of paying an average of all successful bids. We would rather bid according to our own business model for phase two,” Mehra added.
According to an ASTRO official, “ours is a leading media player in South East Asia with interest in TV broadcasting. We’re excited to work with our partners in India, NDTV and Value Labs, in the radio services”.
ASTRO All Asia Network, the holding company of Measat, operates eight FM stations in Malaysia. Meanwhile, ASTRO, through its local partners, has been offering sales, marketing, reasearch, studio facilities and technical services to two Kolkata-based FM stations: Aamar and Power.
Also, in the 90s, Measat entered into a pact with public broadcaster Doordarshan for direct to home broadcasting (DTH). More recently, in December 2004, ASTRO signed a pact with Chennai-based Sun TV for a joint venture in television. NDTV is already in a pact with ASTRO for helping it set up news channels in Malaysia.
Commenting on the deal with Living Media, NDTV director Narayan Rao said, “we have been planning to enter radio for some time now. We are excited about the option of migrating to phase II without the old fixed licence regime. We see a lot of cross media synergies by entering the space.”
According to founder promoter and CEO of Value Labs Arjun Rao, the company will build upon its global experience in the multimedia space.
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