Shyam G. Menon
Latha Venkatraman

Mumbai, Aug. 25

MID-DAY Multimedia Ltd, known for its publishing business, may draw a major share of future revenues from its radio operations, according to a top company official.

At present, bulk of its consolidated turnover comes from publishing the tabloid Mid-Day, remaining the city's best-seller in that category. This revenue mix will change once Mid-Day Multimedia expands its radio business to other cities, which is expected to happen with the second round of bidding for FM radio licences opening by month end. Over 330 stations, across 90 cities, would be covered in the upcoming round.

The spurt in scale offered by the tender is a big jump, when compared to the first round of bidding few years ago. Further, the terms of business are also more attractive, now, as opposed to the hardships the FM radio industry had to cope with earlier.

To participate in the second round, Mid-Day Multimedia, which has vested its radio business in a 100 per cent subsidiary called Radio Mid-Day West, is likely to divest a portion of its equity stake in the latter. "We could divest up to 49 per cent," said Mr Manajit Ghoshal, Chief Financial Officer and Vice-President (Corporate Services), Mid-Day Multimedia.

DSP Merrill Lynch has been mandated with the task of finding a suitable investor. The candidate would, in all probability, be a private equity investor, as the need for local relevance in content programming questions the wisdom of inducting someone with broadcast experience.

Last year, the company's topline from radio was around Rs 6 crore (Mid-Day Multimedia had a net profit of Rs 6.1 crore on total income of Rs 103.46 crore in 2004-2005), all of it from the single station running here for the last two-and-a-half years. But that revenue has been growing at a CAGR of 60 per cent, which coupled with the potential for growth represented by several stations coming up for bidding in the second round, has cast the fledgling business in new light making it capable of racing with print to dominate consolidated revenues.

Revenue from radio should touch Rs 10 crore in the fiscal year 2006, Mr Ghoshal said.

The fund raising for radio may materialise shortly as tenders for second round become available in a few days' time. Even as opportunity dawns in radio, Mid-Day Multimedia is stepping up investment in its traditional business, a good share of its capital expenditure going in for upgrading its press, including new printing premises at Navi Mumbai.

Within this financial year, the flagship tabloid is also scheduled to print in another city. Mr Ghoshal declined to name the city. According to him, the company used to have a ROCE in excess of 50 per cent, which seemed "dangerous" given its similarity to returns in a monopoly situation, and underlined the need to start an investment phase in print. "We were quite under-invested earlier," he said.

Having exited from outdoor advertising business, Mid-Day's focus would now rest on publishing and radio. The share price of Mid-Day Multimedia, on the Bombay Stock Exchange, has been on an upward move gaining 30 per cent over the last month. On Thursday, the share price ended at Rs 100.45.

(This article was published in the Business Line print edition dated August 26, 2005)
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