Apparently the talks between the companies are at an advanced stage and an announcement is expected shortly.
As per the sources the deal size could be close to $500-600 million (i.e. Rs 2,250-2,400 crore). This will be bigger than the Disney"s strategic investments in UTV or even the Turner"s buyout of NDTV Imagine.
With the completion of this deal Sony will have a national reach and it will also give the company thrust to bring down their rivals STAR and Zee.
ETV has a pan-India presence and it also serves the Indian community staying outside India like US and Middle East. These regional channels follow the model of clubbing news and entertainment.
As per the newspapers report, the MSM spokesperson said the “company will not comment on market speculation". Meanwhile email queries to Kiron Rao. Managing Director and Ramoji"s son, of the Eenadu Group, were not responded. The group"s media officer also refused to comment on the information.
The newspaper, Business Standard, stated that the deal will allow other investors the option to exit. In 2008, the publisher of the largest-selling Telugu newspaper, Eenadu.
Ushodaya which is more of a holding company of Ramoji Rao"s media empire spanning newspapers and television. The company, Ushodaya, has three divisions spanning from Eenadu Publications to ETV Network, pickles and food company Priya Foods. The group has further diversified rapidly into film and TV production and distribution, financial services, garment manufacturing and hospitality. This doesn't end, it also owns a 1,600-acre Ramoji Film City.
Who gets the money?
Ushodaya will get money when Sony buys the operations. This will help the Eenadu promoters redeem preference shares and debentures.
The MSM Story
Currently MSM has a six channels under its belt: Sony TV, SAB TV, Set Max, Sony Pix, AXN and Animax. This has given it access to 15% market share of the Hindi general entertainment space.
It has slipped from its premier position. The company has been hamstrung because of the dispute with minority shareholders, inconsistent programming, even the relaunch with Yash Raj Television was not successful.
Even though MSM on its channels has shows like IPL, Kaun Banega Crorepati and Indian Idol, Sony is no longer among the top 3. And this is significan because it has been removed by late entrant Viacom 18, owners of the hugely popular channel 'Colors'; and this channel was launched in 2008.
The Sony strategy
Sony had earlier bought Sri Adhikari Brothers (SAB) TV which proved to be a great success. The idea was to compete with the second-line general entertainment channel like STAR One.
And so far Sony has not had much experience in regional play. Earlier it had branched out the Bangla general entertainment space, but success was limited. Therefore, Eenadu's acquisition will provide Sony the right platform to be a formidable national and regional broadcaster.
A report by Ficci-KPMG states that regional general entertainment will command over the 25.06% of Rs 8,000 crore-plus TV advertising industry and it will have a viewership of 27.3%.
Sony"s competitors STAR India and Zee Entertainment already have a strong presence in the regional general entertainment space. STAR has four regional languages and Zee, on its part, has eight regional channels.