Major Indian media players switch to revamp mode

Sun seeks strategic ally for FM radio, Hinduja TMT restructures business.

NEW DELHI: India’s booming media businesses are in restructuring mode. After Zee Telefilms, Adlabs, and Hinduja TMT, Sun TV is planning to seek a strategic investor in South Asia FM Pvt Ltd. The subsidiary made successful bids for 50 radio licences during the second phase of privatisation of FM radio recently.

While the Zee group announced plans last month to trifurcate its businesses to bring greater focus to the entertainment, cable and DTH divisions, the Anil Ambani-owned Adlabs plans to spin off its radio business after winning several FM radio licences.

On Wednesday, Hinduja TMT said that it would demerge its IT/ITES undertaking into a new company and merge its media and content subsidiary, InNetwork Entertainment Ltd, into the residual entity. After the company’s board meeting, chairman Ashok Hinduja said the "demerger and related restructuring will unlock immense shareholder value."

As for Sun TV, which had a successful listing earlier this week, its IPO prospectus states that South Asia FM "has not entered into any definitive agreements or decisions with any party for strategic investment". Astro of Malaysia is being mentioned as a potential partner in South Asia FM.

Kal Radio is yet another Sun subsidiary for FM radio. In any private FM radio venture, foreign direct investment (FDI) up to 20% is allowed.

South Asia FM plans to carry on all types of radio broadcasting, Sun’s IPO document says. The various types of radio broadcasting would include FM radio, satellite radio and internet radio, it elaborates.

Currently, only US-headquartered WorldSpace offers satellite radio in India. Besides the Sun group, a few other private radio players are keen on starting the satellite service. There are no government norms for satellite radio yet. However, the Telecom Regulatory Authority of India had recently recommended guidelines and norms for satellite radio as well.

Besides satellite and internet radio, South Asia FM also wants to establish and operate all types of wireline and wireless telecom services, according to the group’s declarations to Securities and Exchange Board of India.

Also, it wants to get into maritime and aeronautical communication services. At present, Sun TV holds 94.9% and Kalanidhi Maran 5.09% in South Asia FM. On its direct-to-home (DTH) venture, the prospectus says that a company — Sun Direct TV Pvt Ltd — was incorporated for DTH in February 2005. In Sun Direct TV, Kalanithi Maran (brother of communications minister Dayanidhi Maran) holds 96.6% and his wife Kaveri 3.3%.

"We recently agreed to invest in an affiliated company which intends to undertake DTH operations," it adds.

Meanwhile, according to media reports fuelled by political rivalry in Tamil Nadu, the Sun group may be keen to pick up a stake in the Tata-Star DTH platform.

However, officials with the Tata-Star DTH venture refused to comment on the issue. The Tatas have 80% and Rupert Murdoch’s Star 20% in the Tata-Star DTH project.

"We recently agreed to invest in an affiliated company which intends to undertake DTH operations," it adds.

Meanwhile, according to media reports fuelled by political rivalry in Tamil Nadu, the Sun group may be keen to pick up a stake in the Tata-Star DTH platform.

However, officials with the Tata-Star DTH venture refused to comment on the issue. The Tatas have 80% and Rupert Murdoch’s Star 20% in the Tata-Star DTH project.

In any DTH venture, there’s a 20% sectoral cap for broadcasters. There’s an FDI cap of 20% as well in a DTH project. Among others, the Zee group already operates its DTH service, and Reliance Infocomm is planning a venture soon.

Another significant declaration made in its IPO prospectus is that the Sun group is planning to convert all its free-to-air channels into pay TV. "We also believe that we can generate greater revenue from our viewers by making all of our channels pay channels, which we intend to do in the near future," it says.

It has four Tamil channels and two Malyalam channels. Out of these, three—Sun News, KTV and Sun Music—are already pay channels, except in the Chennai market.

The Sun group also plans to launch three more regional channels, and wants to explore opportunities "to expand geographical coverage".

The group wants to venture into countries where there are large number of Tamil and Malayalam speaking people.