Mumbai: Reliance Capital Ltd (RCL), a financial services firm controlled by the Anil Dhirubhai Ambani Group, on 18 April announced an open offer to increase its stake in TV Today Network Ltd by up to 20%, boosting shares in the broadcaster by 10%.
The offer for 11.6 million shares at Rs130.50 per share is worth up to Rs151 crore.
JM Morgan Stanley, the manager to the offer for Reliance Capital, said in an advertisement in a financial daily that as its stake in the broadcaster was likely to cross 15%, it would make an offer to buy up to 20% more from minority shareholders, as required by Indian law.
Shares in TV Today, which operates four Hindi and English news and current affairs channels, ended 5% up at Rs147.15 after rising as high as Rs154.15 in a firm Mumbai market. “The company has been a laggard in the sector, so it is arguable if a better price could have been offered,” said Ajay Parmar, an analyst at Emkay Research. “The space is getting very crowded and advertising revenues are getting squeezed,” he said.
TV Today’s flagship channel Aaj Tak has more than a fifth of the Hindi news market, but is facing increasing competition from News Corp.’s Star India, New Delhi Television Ltd, Zee News Ltd, Global Broadcast News Ltd and Broadcast Initiatives Ltd.
TV Today, which has a tie up with US DTH operator, Echostar, plans to sign overseas distribution deals and shift to pay mode from free-to-air, which may boost subscription revenues. It posted a total income of Rs141.18 crore and profit after tax of Rs18.83 crore during 2006-07.
India is set to become the top pay television market in Asia-Pacific by 2015, with revenue from advertising and subscription forecast to more than double to $10 billion by 2011, according to research firm Media Partners Asia. Reliance Capital said it would fund the open offer through internal accruals and domestic borrowings. The offer was not subject to a minimum level of acceptance and would be open from 6 June to 25 June, Reliance Capital said.