Star India enters Telugu GEC space, acquires 100% stake at Maa Television Network

Hyderabad: Telugu TV industry witnessed yet another big ticket acquisition with media moghul Rupert Murdoch’s Star India picking up 100 percent stake in Maa Television Network, the largest player in the Telugu GEC (general entertainment channels) space. The deal value is touted to be at Rs 2,500 crore according to reports in the media. However, neither Star India nor Maa TV Network spelt out the deal size.[caption id=“attachment_2097705” align=“alignleft” width=“380”]  Telugu entertainment. [/caption] The 21st Century Fox company, Star India, will get complete control over the broadcast business of Maa Television Network, but the original promoters would retain the name of the company as it is an entity. This enables them, as a company, to exercise multiple options including investing in any other company or business, in accordance with the articles of association, and memorandum of articles of the company, or launch a new business or simply exit the business by liquidating individual shareholdings. This would also enable some of the shareholders to sell off their shareholding fully or partially to another investor who would like to join the board of Maa Television Network Ltd. However, the brands of Maa TV – maa, maa Music, maa Movies and maa Gold – would go into the control of Star India. This would not allow Maa Television Network Ltd to use these brands, even if it wants to launch media business afresh. Maa Television Network Ltd has only sold its assets, including broadcasting business, but not the company. Maa TV was acquired in 2007 by Nimmagadda Prasad from Muralikrishnam Raju who set up the TV channel in 2002. Actor and former Union Minister K Chiranjeevi and his family together hold a stake of 20 percent, while actor Nagarjuna holds 10 percent of stake in the Maa TV. Nimmagadda Prasad holds 65 percent, while retail investors have five percent. In fact, there was an official announcement on 9 April 2012 by Sony Pictures Ltd and Maa Television Network that the former was picking up 30 percent of stake in the latter, subject to necessary approvals and signing of a definitive agreement. However, the deal scuppered for some reasons, which Prasad declined to explain and also sought to clarify at a press conference on Wednesday that there was no pact between Sony Pictures Ltd and Maa Television Network. In 2013, another big media house in Hyderabad, Ushodaya Enterprises, hived off its multiple ETV channels to Reliance Industries Ltd, which came in as a white knight. Eventually, RIL sold the ETV network to Network18. Later, RIL became the owner of Network18 by converting the debt into equity. Similarly, Sun Network was one of the earliest players to enter the GEC and also news segments in Telugu by acquiring a significant stake in a bouquet of channels owned by Gemini network more than a decade and a half ago. The acquisition of Maa Television Netwrok would give Star India an access to the highly attractive Telugu TV market, which is the second largest regional market in India in terms of revenue potential – pegged at Rs 1,800 crore to Rs 2,000 crore – and a market where Star has a very limited presence till date. Maa Television Network is the number one broadcast network in Telugu language content and has a strong trajectory of growth driven by fiction content and movies. The strategic deal will come into effect upon complying with the necessary regulatory formalities and the broadcast business of Maa TV will be integrated with the business of Star India, once the policies and procedures in the acquired broadcast business of Maa TV are aligned with those at Star India, according to Prasad. Star India, a unit of 21st Century Fox, has pioneered content innovation across markets and categories and has a large presence in multiple regions across India, apart from owning channels in different genres like sports, movies, entertainment, etc. “The Telugu market is an important market. However, the pace of innovation has been slow. We are keen to change this by acquiring a local presence and fundamentally changing the content quality paradigm. The acquisition fills a vital gap in our portfolio allowing our advertisers targeted access to a critical market,” said Uday Shankar, CEO, Star India. Prasad said, “We don’t want to be unrealistic. When the time comes, it has to be handed over to a bigger, better entity.” “We see a lot of synergies and complementary strengths emanating from the strategic deal and it will be a win- win proposition for Maa and Star. Telugu TV viewers will stand to gain significantly from this initiative through greater access to a wide variety of qualitative entertainment content,” he said.