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TV-18 not to dilute stake in CNBC India

Anjan Mitra

Raghav Bahl-promoted Television Eighteen Ltd will not dilute 20 per cent equity stake in CNBC India in favour of Sony Entertainment TV, which had the option of buying the shareholding as per an agreement reached last year. A new deal is likely to be finalised within a month.

According to cable and satellite TV industry sources, both TV-18 and SET India are negotiating a new deal under which TV-18 Ltd will not dilute its stake in CNBC India from 49 per cent as the brand equity of the channel has increased phenomenally. TV-18, in return, will give a commitment to keep the channel within the Sony bouquet for a longer period of six-seven years.

Keeping CNBC India within its stable is important for SET India as it has plans to cobble together a digital bouquet of eight to ten TV channels by the end of the year, giving it greater leverage with cable operators and advertisers.

In this regard, SET India has also pitched for distribution responsibilities of Aaj Tak, a Hindi news channel. CNBC India is a 49:51 joint venture between Television Eighteen Mauritius and CNBC Asia. In India, SET India is responsible for the ad sales and distribution of CNBC India under a complex revenue sharing agreement.

Contacted by Business Standard, a senior executive of SET India was non-commital, but added, "negotiations are still continuing with TV-18 (on Sony exercising its option of having 20 per cent stake in CNBC India)."

As part of an agreement signed between the two parties last year, SET had managed to cap the cost of the proposed 20 per cent shareholding in CNBC India at about $ 4.5 million, irrespective of the market valuation of the shareholdings.

According to the deal, TV-18 was to receive a hefty minimum guarantee amount of about Rs 150 million per annum for the next three years from SET.

Any one-hour's programming on CNBC India offers about eight minutes of commercial time. While four-minutes are hawked by CNBC Asia outside India, the rest is tied up within India by TV-18 Ltd which, in turn, has struck an alliance with SET for the purpose.

According to the sources, the deal includes accelerated and tiered commission for SET India wherein, on an average, for every extra Rs 100 million (over the MG of Rs 150 million\year), SET stands to gain an extra 5 per cent as commission on the amount.

However, the sources pointed out that the accelerated commission, as part the earlier agreement, was capped at 30 per cent and SET cannot earn a commission beyond that percentage per year even if it turns out a fantastic performance for CNBC India.

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