Sony Pictures to buy out Indian promoters in MSM for Rs 1,500 cr

After years of negotiations, the Indian promoters of Multi-Screen Media have exited the venture.

Sony Pictures Television, a wholly owned subsidiary of the US-based Sony Pictures Entertainment, has inked a deal with these shareholders to acquire 32 per cent stake for $271 million (about Rs 1,512 crore).

MSM runs Sony Entertainment Television in India.

The seven Indian promoters, including Singapore-based investment banker Rakesh Agarwal, Shemaroo Films Managing Director Raman Maroo, World Media Group's Sudesh Iyer, actor Jackie Shroff and businessman Sadanand Sule, together own 32 per cent in the broadcaster via their consortium company Atlas Equifin and Grandway Global Holdings (Grandway).

After the acquisition, SPT will own 94 per cent in MSM while the remaining six per cent will be held by international fund Capital International Group.

"SPT has enjoyed great success with our channels in India and this acquisition further demonstrates our commitment to entertaining Indian audiences," said Andy Kaplan, president, worldwide networks, SPT.

The deal is subject to government approval and the transaction will be completed by the end of December.

According to Manjit Singh, CEO, MSM, acquisition of the shares will be made in stages, with $145 million (about Rs 809 crore) expected to be paid by SPT by the end of December.

The remaining $126 million (about Rs 703 crore) will be paid in three equal annual instalments starting from the fiscal year ending March 2014.

MSM runs eight channels: Sony TV, SET Max, SAB TV, Sony Pix, AXN, Animax and the recently launched music channel Mix and sports channel

Six. It has 19 per cent market share in the Hindi general entertainment space.

MSM has seen a turnaround in operations since last year.

The general entertainment channel has been steady in the top three, backed by a programming revamp with Kaun Banega Crorepati, Bade Acche Lagte Hain and Saas Bina Sasural.

The network launched two channels in the past year and acquired nearly 30 per cent stake in Telugu channel Maa TV.

"Now, we will have more freedom to acquire and expand our operations.

"We are interested in the regional space. We believe this is one space that is going to grow exponentially.

"We are currently looking at all options -- of creating our own channels from scratch as also strategic acquisitions," Singh told Business Standard.

Persons in the know of developments said the Indian shareholders had been looking to offload their stake for several years, including to private equity players like Providence and Standard Chartered PE, but there were valuation issues.

There have been several failed attempts to list the company in India, which would have given an exit opportunity to some existing shareholders.

In 2009, MSM had failed to clinch a 32 per cent stake sale to the BK Modi Group due to differences over management rights and a lack of clarity on exit options.

The deal was then valued around $300 million.

In 2010, a battle erupted among various stakeholders, with the minority shareholders filing a petition before the Company Law Board.

The board had issued an interim order restraining MSM from raising the paid-up capital of the company.

The shareholders had charged Sony Pictures Entertainment with mismanagement and oppression of minority shareholders.