Reliance Big TV plans to divest 49% in DTH arm

To expand its services in the five-player private direct-to-home (DTH) market, Reliance Big TV Ltd, the promoter of Big TV DTH services of the Reliance ADA Group, plans to sell up to 49 per cent to foreign private equity companies and global DTH players. According to sources, a clutch of leading private equity companies like the Carlyle Group, Sequoia Capital, KKR and US-based DTH firm Direct TV are said to be in talks with Big TV, which launched in August 2008. The company expects to close the deal this quarter, sources close to the development said.
Investment banking sources said the company expects to raise about Rs 8,000 crore. Big TV is currently the second smallest player, with just over 1.8 million subscribers out of 12.5 million DTH customers in India. It is, however, hoping to leverage the Big brand, which also has interests in multiplexes, film production, FM radio and the movie rental business. Big TV is the only DTH firm with no foreign investments. All other DTH players — Tata Sky, Sun Direct, Airtel's Digital TV and Dish TV — have foreign investments of more than 20 per cent, industry sources said. Government norms allow 49 per cent foreign investment in DTH, with a rider that the foreign direct investment (FDI) cannot exceed 20 per cent within the overall 49 per cent foreign investment cap. Asked about the deal, a Reliance ADA Group spokesperson declined to comment, saying Reliance ADA Group is committed to its shareholders and will continue to explore various options to increase the shareholders’ value. Big TV claimed to have added over one million subscribers within 90 days of its launch, a record of sorts amongst DTH players.
All DTH players are currently looking for finance because the DTH service business model involves a significant financial subsidy for subscriber acquisition. Dish TV, with over 5 million subscribers, is the leading DTH player, followed by Tata Sky (about 4 million), Sun Direct (over 2.3 million subscribers), Big TV and Digital TV.

Source: Business Standard

R-ADAG may pick up stake in Ultra

Home video major Ultra is in talks with the Reliance Anil Dhirubhai Ambani Group (R-ADAG) for a strategic equity partnership in the company.

However, he added that the talks were at a nascent stage. Agarwal said that the negotiations with the strategic players were aimed at raising around Rs 100 crore through sale of around 25 per cent equity. If the deal happens, it will value the company at around Rs 500 crore.

There has been a sudden rush of corporate biggies wanting to enter the home video industry after Delhi-based optical storage media maker Moser Baer entered the business last December with DVD and VCD prices at Rs 34 and Rs 28 respectively. Harish Thawani-promoted Nimbus Communications too has announced its plan to join the fray.

According to PricewaterhouseCoopers (PwC), the home video market is expected to grow at a compound annual growth rate (CAGR) of 31 per cent to Rs 2,500 crore by 2011. An additional boost will come from a growing domestic retail sector.

(Source: Business Standard)

Seventymm acquires DVD rental player Madhouse

Bangalore-based VCD/DVD rental service company Seventymm has acquired 100 per cent equity of the New Delhi-based Madhouse for an undisclosed amount.

Madhouse is the first Indian company to offer movie DVD rental services via multiple channels - web, SMS, phone and kiosks - for home delivery. Seventymm chief operating officer Subhankar Sarkar declined to comment on the Madhouse acquisition.

Heavyweights such as the Anil Ambani-promoted ADAG, Nimbus and Moser Baer are entering the largely unorganised sector, which is expected to grow to Rs 2,000 crore by 2010.

(Source: Business Standard)