Bennett, Coleman and Co. (BCCL) has sold off its eight per cent stake in Mid Day Multimedia. BCCL, publishers of The Times of India, had purchased the shares from the secondary market some six-seven months back.
BCCL executives attributed the sales to Mid Day's "uncertain" future following the launch of Mumbai Mirror, the Times Group's latest newspaper for the Mumbai market. The executives claimed the circulation of Mumbai Mirror has already touched "1.7 lakhs against Mid Day's figure of 1.2 lakhs".
They also claimed that Mid Day has dropped its print order by 25 per cent and has been forced to increase its dealers' margin. In essence, Mid Day has been hit, they said.
"Since our stake in Mid Day was strategic in nature, it did not make any more sense for us to stay invested in the company," said a senior BCCL executive.
According to BCCL sources, the average price of purchase of Mid Day shares was Rs 40. When BCCL sold Mid Day shares recently, the average price was Rs 69; the stock is currently hovering around Rs 64.50-levels.
Sources close to Mid Day refuted these insinuations. They said, contrary to what TOI believed, newspaper vendors in Mumbai were giving a feedback that they were selling only one Mumbai Mirror for every 5 copies of Mid Day sold. "So, where is the question of us dropping the print order?" asked a source.
"And, to set the record straight, the ABC July-December 2004 statistics showed that Mid Day had a circulation of over 1.40 lakhs in the Mumbai market. So, I wouldn't know how BCCL has sourced its own figures for Mid Day," the source added.
BCCL executives offered comments on Mid Day's valuations as well. "We had been trying to sell off the Mid Day shares for some time now. We had approached quite a few mutual funds but nobody was willing to buy. Finally, we managed to sell in the secondary market. Fund managers say that the share is over-valued."
But, didn't BCCL book a cool profit of Rs 29 per share from the deal? BCCL executives said the reason why the Mid Day stock touched Rs 70-range had little to do with the company's fundamentals. "That was because of Union I&B minister Jaipal Reddy announcing FII investments in media stocks."
When agencyfaqs! took this query to mutual funds sources, they said the fundamentals of the Mid Day stock have remained unchanged. "There has been no material difference in the stock in the past few months. The Mumbai Mirror figures that BCCL is touting is not certified. I guess we will have to wait for at least one year before we review our position on the Mid Day counter." © 2005 agencyfaqs!