India Value Fund exits Radio City to trade buyer
India Value Fund Advisors (IVFA) has exited Music Broadcast, which runs FM radio station Radio City, to Jagran Prakashan, a listed Indian media conglomerate backed by The Blackstone Group.
The transaction size was not disclosed but LiveMint reported that it is around INR5 billion ($79 million).
Radio City was set up in 2001 as India's first 24-hour private FM station in Bengaluru. By 2005 it had spread to four cities - Bengaluru, Mumbai, Delhi and Lucknow - and was looking to take advantage of a new licensing regime for radio stations.
IVFA bought a 75% stake in Music Broadcast the same year for $22.99 million and helped the business acquire 16 additional licenses, improve the management and sales teams, and introduce new programming and marketing initiatives. In 2007, a 20% stake in the company was sold to Star Group for an undisclosed sum.
Music Broadcast now has 20 stations across seven states and reaches around 10.8 million listeners, with a presence in the top 14 out of 16 advertisement revenue-generating markets with a focus on educated professionals. Revenue for the 2014 financial year came to INR1.6 billion and grew 28% year-on-year in the first half of the 2015 financial year. Operating margins are 28%.
The company has also expanded into live online radio broadcasting. According to the IVFA website, Music Broadcast has a 24% advertising market share and ranks second nationally in terms of revenue.
"The deal with catapult Jagran Prakashan into a leadership position in the radio industry and enable the company to benefit from the rapid growth in radio advertising," Mahendra Mohan Gupta, chairman and managing director of Jagran Prakashan, said in a statement. "The radio business will complement our print, outdoor, activation and digital businesses and enable deeper inroads with advertisers both at national and local level."
Jagran Prakashan publishes 12 newspaper brands with more than 100 editions and over 250 sub-editions across 15 states and in five different languages. The total readership across all its brands is 68 million. Blackstone invested INR2.25 billion in the company in 2011.
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