Four private equity (PE) majors — Providence, Carlyle, Bain and StanChart — are in the fray to buy a $225-250 million stake in broadcast network Multi Screen Media (MSM) with a fresh share sale process getting underway, said people familiar with the development.
MSM broadcast network includes Hindi general entertainment channel Sony Entertainment Channel (SET), cricket and Hindi movie channel SET Max, SAB and SET Pix. A new investor will get roughly 42% stake in the company as the parent Sony has decided to dilute 10% stake along with Indian promoters who hold 32% and are seeking an exit.
Sony will cut its holding to 51% to help MSM raise $60-70 million in capex. MSM’s investment bankers are holding talks with PEs with an expected valuation of over $500 million, a source added.
A formal process to rope in an investor was launched last month, and bids are expected to be filed in the next 10 days. MSM’s proposal to raise capital will be done through fresh issuance of equity leading to dilution of Sony’s stake that stands at 61% now.
Bain, Carlyle and Providence are among the active large private equity investors in the global media and broadcasting business having done several marque deals in this sector. MSM has mandated Standard Chartered for roping in a new investor.
Last year, MSM failed to clinch a 32% stake sale to BK Modi Group, which would have reportedly fetched over $300 million for the local promoters including Jackie Shroff, Jayesh Parekh, Raman Maroo and Sudesh Iyer. In February this year, ET had reported that MSM could be launching a fresh sale process after dealmaking with BK Modi and Ashmore failed to go through on perceived differences over management rights and lack of visibility regarding exit options.
NP Singh, COO of Multi Screen Media, declined to comment saying, “we do not comment on market speculations”. An email query sent to Ron Sato, senior vice-president at Sony Pictures Television International remained unanswered.
MSM has seen value erosion in the past few years after losing market share in the general entertainment channel (GEC) space, and IPL rights appear to be the broadcaster’s main bulwark, said a sectoral analyst. SET Max holds an exclusive nine-year telecast rights for the blockbuster Indian Premier League (IPL), which is arguably the most lucrative sporting property in the country, besides a large library of Hindi film rights.
Last year, BK Modi is believed to have discussed a valuation of around $1 billion. Sources said MSM is offering a value creation opportunity for the new investor either through a public offering, or through a possible exit of Sony in a phased manner. However, this could not be confirmed independently. MSM has been through significant changes in 2009 starting with the departure of its long serving CEO Kunal Dasgupta in February.
The company’s flagship, SET, witnessed a complete overhaul of its programming in May. SET stands at the fifth spot in the general entertainment channel (GEC) category and commands about 10% of the total channel share in this space while leaders Star Plus hold about 22%.
Source: Economic Times