Reliance to Sell Big FM to MBL for ‘Enterprise Value’ of Rs 1050Cr

Anil Ambani's Reliance Group will sell its stake in Reliance Broadcast Network Ltd (RBNL), which operates Big FM radio channels, to Jagran Prakashan-owned Music Broadcast Ltd (MBL) for an enterprise value of Rs 1,050 crore, a company statement said on Monday, 27 May.

The board of MBL, which operates under the brand name of Radio City, on Monday approved the acquisition of RBNL, a Reliance Group company.

Meanwhile, Reliance Capital and Reliance Land (part of the Reliance Capital Group) announced to divest their equity stake in RBNL to MBL, which would help them to reduce their loan burdens, the statement said.

This deal will make MBL, which currently operates 39 channels, the largest private FM Channel operator.

RBNL has 58 stations. Only 40 RBNL FM stations, which are part of the transaction, will be transferred to MBL. So, post the deal, MBL will have a network of 79 stations.

As many as 18 channels out of Big FM's 58 overlap with Radio City. In the second leg of the transaction, Reliance will sell these residual 18 stations to another existing player for Rs 150 crore, PTI quoted sources as saying.

According to MBL, the entire transaction is expected to close in the first quarter of FY2021.

“Once the BIG FM stations are added, we would have the largest Radio FM network in the country, which would give us very unparalleled reach in the market.” 

MBL director Apurva Purohit

Several other synergies would also play as both brands are complementary to each other, she said adding that these synergies would help both in revenue maximisation and cost optimisation.

MBL is likely to retain both the brands – Radio City and Big FM – in its fold.

Purohit told PTI that "after phase III (of the FM frequency auction) people are allowed to have multiple frequencies in a city. So as of now, we do not have any problem if, we have more than one frequency in a city. We would continue to have Radio City frequency and Big FM frequency".

While, providing details of the deal, Reliance Capital in a statement said: "MBL will initially acquire a 24 percent equity stake of RBNL by way of a preferential allotment for a total consideration of Rs 202 crore, and thereafter subject to the receipt of all regulatory approvals, MBL will acquire all of the remaining equity stake held by Reliance Capital and Reliance Land in RBNL at a total enterprise value of Rs 1,050 crore."

“This transaction is part of our overall strategy to reduce exposure in non-core businesses and will reduce Reliance Capital’s debt by an estimated Rs 1,200 crore.”

Reliance Capital CFO Amit Bapna

Bapna further said: "Together with the recently announced stake sale in Reliance Nippon Asset Management for Rs 6,000 crore and other ongoing monetisation plans, we expect Reliance Capital's debt to reduce by approx Rs 12,000 crore (nearly 70 percent) in the current financial year."

(With inputs from PTI)