ZEEL to acquire the TV business of Anil Ambani led Reliance Group, ZMCL to acquire stakes of radio biz

The Board of Directors of Zee Entertainment Enterprises Limited ("ZEEL") has announced that the board of directors has approved the acquisition of the General Entertainment Broadcasting Business Undertaking of Reliance Big Broadcasting Private Limited, Big Magic Limited & Azalia Broadcast Private Limited, all part of Anil Ambani led Reliance Group Entities through a scheme of demerger and execution of definitive agreements in relation to such proposed acquisition (the "Proposed Transaction").

The TV Broadcasting business of Reliance Group Entities currently comprises two operational general entertainment channels ("BIG Magic" and "BIG Ganga") and 4 other TV licenses. BIG Magic is a Comedy channel catering to Hindi Speaking Markets. BIG Ganga is a leading Bhojpuri entertainment channel catering to audiences in Bihar, Jharkhand and Purvanchal. The channels are available on all major MSOs (Multi Service Operator) and DTH (Direct-To-Home) operators. The General Entertainment TV Broadcasting business undertaking along with its assets, liabilities, licenses, trademarks etc. shall get demerged from "BIG Magic Ltd", "Reliance Big Broadcasting Private Ltd" and "Azalia Broadcast Private Ltd" into ZEEL through a court-approved scheme.

In another major development, The Board of Directors of Zee Media Corporation Limited ("ZMCL") has approved acquisition of 49 per cent stake in 92.7 BIG FM, the radio broadcasting business of Reliance Broadcast Network Limited (RBNL) and the execution of definitive agreements in relation to such acquisition (the "Proposed Transaction").

The radio broadcasting business of Reliance Group is being operated in the entity - Reliance Broadcast Network Ltd ("RBNL"). Reliance Broadcast Network Limited runs the largest network of FM radio channels in India - 45 operational licenses (issued under Phase II and migrated to Phase III) and 14 new licenses (issued under Phase III). The FM channels are being broadcast under the brand "92.7 BIG FM", reaching to 45 cities, 1200 towns and over 200 million people. It reaches out to around 43 million listeners per week and engages with a large number of national and local advertisers. Reliance Broadcast Network Limited shall be transferring the 45 operational and 14 new licenses into two SPVs respectively along with the assets and liabilities.

ZMCL shall acquire 49 per cent stake in each of these two SPVs. ZMCL and Reliance Broadcast Network Limited shall also have a call/put option to acquire/sell the balance 51 per cent after the lock-in provisions on the permission holder of these licenses expire. As per MIB regulations, atleast 51 per cent shareholding needs to be held by the permission holder for a minimum period of 3 years from the date the channels were operationalised. The lock-in period for the 45 operational licenses shall expire on 31st March 2018, whilst the lock-in period for the 14 licenses shall expire after the expiry of 3 years from the day all 14 licenses shall have become operational, which is expected to be around March 2020.

Spokesperson Comment

Punit Goenka, managing director & chief executive officer, ZEEL says in a press release, "We are pleased to announce this acquisition which further adds to our expanding universe of general entertainment channels. BIG Magic gives us access to comedy genre enhancing our customer offerings. BIG Ganga, a leading Bhojpuri channel syncs with our strategy of expanding into the regional markets which offers attractive growth potential."

Rajiv Singh, chief operating officer, ZMCL said "We are pleased to announce this acquisition which shall not only be complementary to our current business but accelerate its growth too. We are currently running successfully a bouquet of 11 news and current affair channels and with the addition of 59 radio licenses, we will be reaching out to a much increased audience base and will keep them engaged on different media platforms. This acquisition shall bring about the desired business diversity and will help in achieving the sound financial objectives at an accelerated pace. We are confident that this investment will enhance value for all stakeholders and looking forward towards this exciting journey to take the company to the next level."

Sam Ghosh, ED and Group chief executive officer, Reliance Capital adds, "We are happy to divest 100 per cent of our general entertainment TV business to Zee Entertainment. This transaction is part of our strategy to reduce exposure in non-core businesses and work towards further reducing debt under Reliance Capital."

The transaction for radio acquisition is expected to close in the first half of CY2017, while the one of Television channels by second half of CY2017.