All about Hyderabad's new IPL franchise owners Sun TV

Sun TV, the Kalanithi Maran-promoted media group, have bought the IPL Hyderabad franchise for an amount of Rs 85.05 crore per year, which was substantially higher than PVP Ventures bid of Rs 69.03 crore a year. Following the announcement, shares of Sun TV extended their fall and are currently trading down 3.3 percent.

Ironically, in September, there had been increasing investor interest in the Sun TV stock, which has given close to 17% returns as the deadline for digitisation of cable services in metros (31 October) nears. According to the Telecom Regulatory Authority’s guidelines, cable TV-enabled households across the four metros - Delhi, Kolkata, Mumbai and Chennai - need to install set-top boxes by 31 October.

[caption id=“attachment_502217” align=“alignleft” width=“380”] Sun TV[/caption]

Sun TV is a dominant player in South India, which gives the company high bargaining power in terms of sharing of revenues with multi-specialty operators across locations.

Headquartered in MRC Nagar, Chennai, Sun TV’s chairman Kalanithi Maran is the undisputed king of regional media there. Maran has also gone national with his radio stations and the direct-to-home business. With 20 satellite TV channels and 48 FM radio stations, Sun TV has been named Asia’s most profitable media corporation as well as the largest TV network . Its flagship channel is Sun TV which was the first fully privately owned Tamil channel in India.

After toying with the idea of getting into the aviation sector for almost three years, Maran in 2010 also acquired SpiceJet. Maran is currently tapping the market to raise as much as Rs 400-500 crore, in a move to retire the airline’s debt that was raised from local banks for operational needs.

Besides this, the company recently signed a content-sharing agreement with Arasu, the largest cable operator in Tamil Nadu. This agreement would enhance the company’s subscription revenues in the September 2012 quarter, which had fallen by 30% in FY12. In addition, the company also stands to benefit largely from overseas subscription revenues due to the appreciation of the dollar.

Kalanithi and his wife, Kavery Maran, were second in the list of Indian executive pay charts with a package of Rs 57.01 crore each for the fiscal 2011-2012, behind Congress MP Naveen Jindal.

Kalanithi is the son of former Union Minister of commerce Murasoli Maran and the brother of India’s former textile minister Dayanidhi Maran. His grandmother is the sister of former Tamil Nadu Chief Minister M Karunanidhi.

Currently, the Central Bureau of Investigation is poised to file a chargesheet against Kalanithi Maran and his brother, Dayanidhi Maran who was former Telecom Minister in Manmohan Singh’s ministry, in UPA I, from May 26, 2004 to May 13, 2007, for receiving Rs 550 crore bribe for their role in the acquisition of Aircel by Malaysia-based firm Maxis. The duo is alleged to have favoured Malaysian firm Maxis over Aircel in granting telecom licences in 2004-05.

In its report, CBI said “undue favours” were offered to Maxis even after it took over Aircel and these were part of a plan involving Dayanidhi when he was telecom minister in UPA-1. According to CBI, illegal gratification was accepted by Dayanidhi through Kalanithi in the garb of premium share investment in family-controlled Sun Direct. The agency also accused Dayanidhi of blocking he legitimate requests of Dishnet DSL in order to help the Maxis to takeover.

Alleging a Maran-Maxis nexus, CBI had said, “It is prima facie revealed that the active intervention of Dayanidhi Maran and his brother Kalanithi Maran in restricting business environment of Siva Group, change of ownership to M/s Maxis.”

It has been alleged by former Aircel Chief C Sivasankaran that Maran as the then telecom minister favoured Maxis-group in the takeover of his company and in return investments were made by the company through Astro network in Sun TV owned by Maran family. Communications and undue favours post this change was for mala fide considerations."

A New Indian Express report had in 2011 disclosed that the CBI was probing the use of a free private telephone exchange by Maran which was actually used by Sun TV to reduce its costs. Dayanidhi, when he was Communications Minister in UPA-1, got a public sector company, Bharat Sanchar Nigam Ltd (BSNL), to give his brother’s company 323 telephone lines for free in Chennai.