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In an interview with BusinessLine , Zee Media COO Rajiv Singh identified the roadmap for setting up its radio business. Excerpts:
What was the strategic thought behind acquiring Big FM?
There is a huge diversity and yet integration in the business. Both our businesses are homogeneous as they cater to the four metros. The radio business covers 45 cities where we already have our regional broadcasting footprint. When you look into the homogeneity of the market, there is great value that you unlock for both national and regional advertisers.
Is the M&A route much prudent than acquiring FM channels via auction?
When you start building your business in a cluttered environment, you are basically building everything as a greenfield project. If you acquire the market leader, you are already building an asset class. The business has no gestation and has a huge customer base. The project is in a mature stage. 92.7 Big FM is a market leader. We want to build on this acquisition. Acquiring licences and setting up the business takes time.
Zee Media and Reliance Broadcast seem to have a call/put option to acquire/sell the balance stake. Will you be acquiring post the lock-in period?
That goes without saying. The call/put option will be exercised once we have gone through the stipulated Ministry of Information and Broadcasting guidelines. The guidelines says no third party can acquire any asset till the lock-in period gets over. For Big FM, the first lock-in period expires in 2018 for the first 45 operational licences and we will look at acquiring post that period. The lock-in period for the next 14 licences expires three years from the day they become operational, which is expected to be around March 2020.
How will Zee Media fund the acquisitions?
The whole deal consideration is ₹1,592 crore. We will doing about ₹700 crore through internal accrual and the balance through corporate guarantees.
Will you be undertaking any kind of restructuring on the content, especially since 92.7 Big FM is a retro channel?
To be clear, we are acquiring a fairly strong asset class. It is a phenomenally profitable business. We will be only nurturing the talent pool. There is absolutely no question of a restructuring. We would only cross-leverage the opportunities.
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