New Delhi: Global media and entertainment conglomerate NBC Universal Inc. is in talks with New Delhi Television Ltd, or NDTV, to increase its stake in NDTV Networks Plc, the holding company for the group’s entertainment and lifestyle businesses. Sameer Nair, chief executive of NDTV Imagine, the unit that houses the eponymous general entertainment channel and other entertainment businesses, said the US-based company could soon become a majority stakeholder in NDTV Networks by increasing its holding from the current 26%. “They (NBC) will be hiking their stake. That is work-in-progress. All the money will be reinvested in the business,” he added.
Nair declined to share details of the negotiations since the deal is yet to be inked. “The discussion has been on for three-four months. I can’t give you the exact figures...but it will be a majority (stake).” NBC acquired 26% in NDTV Networks for $150 million (around Rs580 crore) in January 2008. At the time of signing the deal, NDTV Networks was valued at $577 million (Rs2,273 crore). The deal also gave NBC, in which General Electric Co. has an 80% stake, (French media group Vivendi SA holds the rest), the option to increase its stake to 50% in 2011 at a fair market price.
Useful money: NDTV Imagine chief executive Sameer Nair. NBC’s proposed stake increase in NDTV Networks comes at a time when the Indian entertainment company has spent heavily on new launches. Madhu Kapparath/Mint
NDTV Networks is the holding company for NDTV Imagine and NDTV Lifestyle, online business NDTV Convergence, media technology services Ngen which is a joint venture between NDTV and back-office services company Genpact Ltd, and software and technology company NDTV Labs.
Even as it finalizes the transaction, NDTV is looking to launch NBC’s channels in India as part of an effort to expand its entertainment business. “Last year, we wanted to launch a set of NBC channels such as Sci-Fi, 13th Street and Universal Channel, among others. But carriage fees...and then the recession hit (us). But I guess we’ll do that (launch channels) next year,” said Nair. Carriage fees refers to the amount broadcasters need to pay cable firms to carry their channels.
The money will be useful for NDTV, which has spent heavily on new launches.
At a consolidated level, New Delhi Television Ltd posted a loss of around Rs500 crore in 2008-09, “mainly on account of launching five broadcasting properties, including NDTV Imagine, which entails heavy investment in the initial years in the form of operating cost”, said a report released 19 September by First Global Securities.
Vivek Gupta, mergers and acquisitions partner at BMR Advisors, said any increase in its stake by NBC would indicate the American broadcaster’s willingness to fight it out in the general entertainment space. The move was inevitable, he added. “The fight in the general entertainment channel space is about staying power.”
“We would like to break even as soon as possible, but I would expect to get into an operating profit zone by the end of this fiscal and by next fiscal get into our break-even zone,” said Nair, referring to NDTV Imagine. “We spent a lot of money on carriage, a lot more than we had anticipated. The market has cooled down a bit so it is declining, but it is still a cost.”
According to the latest data provided by media research firm TAM, NDTV Imagine is ranked fourth in the general entertainment space after Star Plus, Colors, Zee TV and Sony Entertainment by gross rating points, or GRPs. GRPs are the sum total of TRPs, or the television rating points which, in turn, indicate the percentage of viewers watching a programme at a given point. Nair said NDTV Imagine wants to be among the top three channels in its genre sometime in the next financial year.