New Delhi / Mumbai: The broadcaster of general entertainment channel 9X and music channel 9XM, INX Media Pvt. Ltd is in talks with potential investors to raise $100-150 million (Rs437-635.5 crore) in a second round of funding to finance expansion plans.
INX Media, which also broadcasts English news channel NewsX through subsidiary INX News Pvt. Ltd, had raised $170 million in the first round of funding completed in February 2007.
“We are talking to investors and are hoping to complete this round by December,” said Peter Mukerjea, chairman of INX Media. Mukerjea, formerly chief executive officer of News Corp.-owned Star India Pvt. Ltd, and his wife Indrani control a 45% stake in INX Media. Private equity investors, who together hold 50% of the company, include the Indian unit of the Singapore government’s investment arm Temasek Holdings Pte. Ltd (19.99%) and private equity fund New Silk Route Advisors (20%). Two investment units of Kotak Mahindra Bank Ltd and New Vernon Private Equity Ltd together hold 10.01%. Employees hold the rest of equity.
“We would have mostly deployed the money we raised in the first round by December or thereabouts,” Mukerjea said. “The money from the second round will be used to strengthen our existing properties and also for expansion into the regional markets, which is part of the original blueprint.”
According to Indrani Mukerjea, co-founder and chief executive officer, or CEO, the firm is planning 11 new channels, of which two will be national, with the others targeted at regional markets.
“One more national GEC (general entertainment channel) and music channel are being planned, which will be very well differentiated from 9X and 9XM,” she said.
The firm is planning GECs in Marathi, Bengali and Punjabi and music channels in Gujarati, Bengali and Punjabi. In addition to these, INX News will launch city-specific news channels for New Delhi and Mumbai and a third city, which will likely be Bangalore, according to Indrani Mukerjea, who added that the company had applied for licences to the ministry of information and broadcasting.
“There is a lot of interest from potential investors and I’m optimistic that INX Media will be an attractive target for a global strategic investor who is seeking a presence in India as we are about the only available player who is not already aligned with a strategic player,” Peter Mukerjea added. “The new round will ideally see a combination of a strategic investor as well as financial investors.”
India’s GEC space is a lucrative segment, typically accounting for an average 20.7% of viewership between 2004 and 2007, according to data from audience research firm TAM Media Research Pvt. Ltd. According to Punitha Arumugam, group CEO, Madison Media Ltd, a Mumbai-based media buying company, the segment attracts about 30% of the television ad spending.
The bulk of it, however, goes to three established GECs— Star Plus, operated by Star India, Zee TV, run by Zee Entertainment Enterprises Ltd, and Multi Screen Media Pvt. Ltd’s Sony Entertainment Television. According to Arumugam’s estimate, these three channels would have cornered nearly Rs1,800 crore of the total Rs2,000 crore ad spending on GECs in 2007. The total ad spending on television is 2007 was Rs7,000 crore.
The segment saw a raft of new entrants during 2007-08. NDTV Imagine, broadcast by a subsidiary of NDTV Networks Plc., launched in January, soon after which NBC Universal Inc. picked up a 26% stake in NDTV Networks, with the option of increasing it to 50% in the third year at a fair market price.
Colors, which was launched in July, is run by an equal joint venture between Viacom Inc. and Television Eighteen Ltd. Another GEC, which is expected to go on air by end-2008, will be launched by Real Global Broadcasting Pvt. Ltd, an equal venture between Alva Brothers Entertainment Pvt. Ltd and Turner International.
Darius Pandole, partner, India, at New Silk Route Advisors, said he was satisfied with INX Media’s performance. “Since the inception last year, INX has successfully launched a bouquet of channels and achieved impressive ratings in the general entertainment and music segments,” Pandole said.
“9XM has become the leader in the music segment and 9X has significantly improved its performance. NewsX, I think, is still finding its niche,” said Madison’s Arumugam.