Japanese major Sony Corporation is in preliminary talks with Mukesh Ambani’s Network18 Media & Investments for a possible stake buy, making it the second attempt by the group in 10 months for a local acquisition.
In March, Sony had emerged the front runner to acquire a 20 per cent stake in Zee Entertainment after promoters of the latter said they were ready to offload up to half their shareholding to a strategic investor.
The talks had eventually fallen through over a valuation mismatch, forcing the Japanese major, which runs a bouquet of entertainment channels in the country, to look elsewhere, said persons in the know. Apart from a stake buy, some other options on the table include a merger of the entertainment businesses of Sony and Network18 Media, they said, as the Japanese major seeks to consolidate its presence in India, a market it considers key.
Sony, said sources, is expected to evaluate its options carefully owing to regulation around foreign direct investment in media. While 100 per cent FDI is permitted in the entertainment broadcast business here, FDI in news media is capped at 26 per cent, both in the broadcast and digital segments.
Sony is likely to put around Rs 15,000 crore on the table for at least a 26 per cent stake in Network18, said persons in the know, valuing the latter at nearly three times its FY19 sales of Rs 5,116.2 crore.
Based on Thursday’s close, Network18’s market capitalisation stood at Rs 2,900 crore, data from BSE shows.
Network18 has a presence across entertainment and news broadcasting with subsidiaries such as TV18 (news) and joint ventures such as Viacom18, where it holds 51 per cent stake.
A mail sent to Sony Pictures Network elicited no response till the time of going to press. A spokesperson for Reliance Industries (RIL), the holding company of Network18, said it could not comment on market speculation.
“Our company evaluates various opportunities on an ongoing basis.
We have made and will continue to make necessary disclosures in compliance with our obligations under the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations 2015 and our agreements with the stock exchanges,” the RIL spokesperson said.
Experts said the two firms could exploit synergies if they came together. One is the collective might on the television broadcasting side where both Sony and Network18 are key players. Sony and Colors are among the leading players in Hindi general entertainment, while channels such as CNBC-TV18 and CNN18 are key players in news. The Sony-Network18 combine will also become a formidable force against Star-Disney and Zee, said experts.
For the financial year ended March, Sony Pictures, an unlisted company, posted an operating revenue of Rs 6,223.73 crore and a net profit of Rs 346.43 crore.
Sony and Network18 are also expected to gain an edge on the digital side, where competition has grown thanks to streaming majors such as Netflix, Amazon Prime Video, Hotstar and Zee5. While Sony could benefit from the Reliance Jio platform, Network18 could get access to content from the Sony stable.
In March, Sony had emerged the front runner to acquire a 20 per cent stake in Zee Entertainment after promoters of the latter said they were ready to offload up to half their shareholding to a strategic investor.
The talks had eventually fallen through over a valuation mismatch, forcing the Japanese major, which runs a bouquet of entertainment channels in the country, to look elsewhere, said persons in the know. Apart from a stake buy, some other options on the table include a merger of the entertainment businesses of Sony and Network18 Media, they said, as the Japanese major seeks to consolidate its presence in India, a market it considers key.
Sony, said sources, is expected to evaluate its options carefully owing to regulation around foreign direct investment in media. While 100 per cent FDI is permitted in the entertainment broadcast business here, FDI in news media is capped at 26 per cent, both in the broadcast and digital segments.
Sony is likely to put around Rs 15,000 crore on the table for at least a 26 per cent stake in Network18, said persons in the know, valuing the latter at nearly three times its FY19 sales of Rs 5,116.2 crore.
Based on Thursday’s close, Network18’s market capitalisation stood at Rs 2,900 crore, data from BSE shows.
Network18 has a presence across entertainment and news broadcasting with subsidiaries such as TV18 (news) and joint ventures such as Viacom18, where it holds 51 per cent stake.
A mail sent to Sony Pictures Network elicited no response till the time of going to press. A spokesperson for Reliance Industries (RIL), the holding company of Network18, said it could not comment on market speculation.
“Our company evaluates various opportunities on an ongoing basis.
We have made and will continue to make necessary disclosures in compliance with our obligations under the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations 2015 and our agreements with the stock exchanges,” the RIL spokesperson said.
Experts said the two firms could exploit synergies if they came together. One is the collective might on the television broadcasting side where both Sony and Network18 are key players. Sony and Colors are among the leading players in Hindi general entertainment, while channels such as CNBC-TV18 and CNN18 are key players in news. The Sony-Network18 combine will also become a formidable force against Star-Disney and Zee, said experts.
For the financial year ended March, Sony Pictures, an unlisted company, posted an operating revenue of Rs 6,223.73 crore and a net profit of Rs 346.43 crore.
Sony and Network18 are also expected to gain an edge on the digital side, where competition has grown thanks to streaming majors such as Netflix, Amazon Prime Video, Hotstar and Zee5. While Sony could benefit from the Reliance Jio platform, Network18 could get access to content from the Sony stable.
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