The deal should not be more than Rs 30-35 crore, industry sources indicated. No confirmation was available on the exact nature of financial arrangement between the three investors.
While Astro, being a foreign company can hold only 20% (foreign direct investment in private FM radio is capped at 20%), NDTVs stake (purchased by NDTV News, a fully-owned subsidiary of NDTV) is expected to be in the same region. Value Lab is the majority stake holder. Together, the three investors will acquire Radio Today (Mumbai) Broadcasting Ltd, Radio Today (Delhi) Broadcasting Ltd and Radio Today (Calcutta) Broadcasting Ltd from the Living Media Group. The three radio companies hold licenses for FM radio broadcasting in Mumbai, Delhi and Kolkata respectively, under the Red FM brand.
The sources said, Red FM was scouting for funds to kick-start the phase-II of private FM radio. NDTV was interested in FM radio business as it had done a market study before the FM-II bidding process began. The fact that they did not submit their application was very surprising, an industry observer said.
Other existing private FM operators reacted sharply to the change of ownership in Red FM. Its surprising that NDTV is not the majority stake holder in Red FM. Unless they have a full-fledged command over programming and marketing operations, the deal will not make financial sense to them, a senior executive of a leading FM station told FE. While Arjun Rao, founder promoter and CEO of Value Labs termed the investment as expanding into the radio sector to build upon their global experience in the multimedia space, Narayan Rao, director, NDTV summed it up as an option of migrating to phase II without the old fixed license regime.
The other major FM radio investment deal was struck between Radio Mid Day and BBC Worldwide for Rs 38 crore.