INDIA BUSINESS WORLD - JULY - AUGUST - 2007
The Month that was ...

TV18 TO BUY 50% IN MTV INDIA FOR RS 200 CRORE

THE Television Eighteen Group (TV18) is picking up 50% equity stake in MTV Networks India (MTVI) for Rs 200 crore. MTVI, which is part of media giant Viacom, is engaged in marketing and distribution of TV channels - MTV, VH1 and Nickelodeon. This is one of the rare instances of an Indian company picking up equity in a hitherto wholly-owned subsidiary of a foreign major.

The deal is part of the strategic alliance between Viacom and the TV 18 Group announced in May this year. That TV18 would directly pick up equity in MTVI was not disclosed at that time. As of now, the existing TV channels are being uplinked from Singapore. According to the plan, MTVI would uplink and broadcast Viacom branded TV channels apart from a new general entertainment channel in Hindi and a bouquet of non-news and non-current affairs channels. However, it will not set up any uplinking facility in India and will outsource it to a third-party service provider.

In addition, it would also get into movie production, distribution, marketing and related activities along with developing, marketing and distributing digital content for various media platforms such as internet and mobile.

In the existing shareholding structure of MTVI, MTV Mauritius owns 99.9% equity stake with the balance nominal equity held jointly by MTV Mauritius and the former managing director of MTVI Alex Kuruvilla. In addition, MTV Mauritius also holds preference shares.

In line with infusion of additional funds in the company, the coupon rates of these redeemable cumulative preference shares are being reduced from 6% to 0.01%. Further, these preference shares would become optionally convertible preference shares.

The TV 18 Group is investing through a wholly-owned Mauritius entity - BKH Holdings. BKH would be raising the funds overseas for acquiring the equity stake. MTVI would make royalty payment to Viacom amounting to 2% of net revenues for use of Viacom brands. In addition, it would pay 1% of net revenues for technical assistance and consultancy services to be provided by Viacom to MTVI on an ongoing basis.

MTVI was set up in 2000 as a wholly-owned subsidiary of MTV Mauritius. The company has an existing co production deal with the Anil Dhirubhai Ambani Group for making movies targeted at youth.