Sun buys 48.9% stake in Red FM

South Asia FM Ltd, a unit of Kalanidhi Maran’s Sun TV Network, today said it would acquire 48.9 per cent equity in radio channel Red FM, sending the Sun TV stock up nearly 6 per cent by the close of trade today on the Bombay Stock Exchange.

The promoters of Red FM – Usha Reddy, Arjun Rao and Prannoy Roy’s New Delhi Television – will hold the remaining stake. They have also got 35 per cent of the enlarged equity of South Asia FM through an investment company A H Multisoft and NDTV News.

It is not clear yet whether, apart from the equity swap, any money is changing hands.

According to a joint study of Federation of Indian Chambers of Commerce & Industry, an industry body, and PricewaterhouseCoopers, the consultancy, the size of the radio broadcasting industry will expand from Rs 500 crore to Rs 1,700 crore by 2011 – a compounded annual growth rate of 28 per cent.

NDTV, Hyderabad-based Value Labs and Malaysia’s Astro All Asia Networks had acquired Red FM from Radio Today, a unit of Living Media, which owns India Today magazine, for about Rs 130 crore last year.

Under the broadcasting norms, this is the maximum that Sun TV can acquire in Red FM for the moment.

With this deal, Sun TV, which has radio licences for 23 locations, none in the metros, and operates two radio stations, one each in Jaipur and Bhubaneswar, will get a foothold in the north, west and east of the country. Red FM is on air in the lucrative markets of Mumbai, Delhi and Kolkata.

Chennai-based Sun TV holds a 94.91 per cent stake in South Asia FM, which focuses on expanding the company’s broadcasting footprint beyond south India. Kal Radio, in which Sun TV owns 89 per cent, manages the group’s broadcasting operations in the south.

The Sun TV-Red FM consortium will have to contend with Radio Mirchi, owned by Bennett, Coleman & Co, and Radio City, which are major players in the markets of Mumbai, Delhi and Kolkata and a few second tier cities of the north.

(Source: Business Standard)