Aroon Purie-promoted Living Media Group has exited FM radio business by divesting its entire holding in Red FM to a group of investors that includes NDTV News, promoted by Prannoy Roy.

Other members of the consortium buying Red FM, which is present in Delhi, Mumbai and Kolkata, are Hyderabad-based Value Labs and Malaysian broadcasting company Astro.

This marks NDTV’s foray into radio at a time when the government is in the process of awarding the second round of FM radio licences. On January 6th, the government is to open the bids for 13 cities.

The acquisition comes a day after the BBC Radio announced a Rs 31.8 crore deal to acquire a stake in Radio Mid Day.

“Associate companies of Value Labs and Astro through their existing Indian joint ventures have come together with NDTV News (a subsidiary of NDTV) to acquire Radio Today (Mumbai) Broadcasting Limited, Radio Today (Delhi) Broadcasting Limited and Radio Today (Calcutta) Broadcasting Limited from the Living Media Group,” NDTV said in a statement on January 5th.

The companies have not disclosed the exact structure of the joint venture or the financial details of the deal. Sources close to the development said Value Labs is the largest shareholder in the consortium. It has formed a joint venture with Astro.

This joint venture, in turn, has formed another joint venture with NDTV for the acquisition.

Astro is believed to have taken 20 per cent stake, which is the maximum foreign investment allowed in private FM radio.

NDTV has a separate joint venture with Astro to run television channels targeting South East Asian countries. In this, NDTV holds 20 per cent equity.

NDTV has been eyeing FM radio, but did not participate in the bidding for radio frequencies in the second round.

Arjun Rao, founder promoter and CEO of Value Labs said, “We are very excited with the opportunity to expand into the radio sector in India and hope to build upon our global experience in the multimedia space.”

Ambit Corporate Finance was the financial advisor to the transaction, while Amarchand & Mangaldas & Suresh A Shroff was the legal advisor.

The second round of FM radio licensing has generated a lot of interest as the government has not only allowed 20 per cent foreign direct investment but also moved to a revenue share regime from the earlier licence-fee structure.

Before the government moved to the revenue share model, the companies were expected to cough up as much as Rs 350 crore, which was much more than the revenue generated by the operators.

As many as 100 companies have shown interest in entering the sector and the government has shortlisted 90 for the financial and technical rounds.

Another foreign broadcaster which is eyeing a stake in a radio venture is Rupert Murdoch’s Star India. It is likely to pick up a stake in a licence holder after the government gives out the second round of licences.

(www.business-standard.com)