Will Videocon save Deccan's media business?

In the latest upheaval for the money-spinning Twenty20 tournament which has been in the limelight due to ownership troubles over several IPL teams, Venugopal Dhoot, chairman Videocon Group has confirmed his interest in bidding for the Deccan Chargers franchise after cash-strapped Deccan Chronicle issued a tender notice inviting prospective buyers to bid for its IPL team.

Finding a buyer at the right price despite its liabilities is Deccan Chronicle’s biggest problem, which is why many suitors decided against it even after expressing keen interest in the team. With few takers the bidding price is comparatively less than Rs 15,00-Rs 1,000 sought by the owners previously. Apart from the owners, the survival of the team is crucial for the Deccan Chronicle’s lenders too because if the team is scrapped they will lose all the money that had been lent to the Reddy’s. Even the BCCI is in a hurry to sort out this mess because players’ contracts are scheduled to be renewed on October 3 after which they will become free agents and it will be difficult to assemble a team for the 2013 season.

[caption id=“attachment_447274” align=“alignleft” width=“380”]  AFP[/caption]

However, with the Videocon deal being pegged at around Rs 800 crore, Deccan Chronicle burdened with debt of around Rs 3,200 crore, can finally heave a sigh of relief as this deal would provide the much-needed funds to protect its core media business from sinking.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Although the current valuation is 60 percent less than the Rs 1,200 crore sought by DCH and BCCI, it would be enough to pay off Deccan Chronicle’s lenders and prevent market speculation that Deccan Chargers is a distress sale.

In 2008, DCHL paid $107 million ( Rs 598 crore) for Deccan Chargers, making it the third costliest team among the first lot of franchise buyers. The owners would have loved to sell the brand at a higher valuation, but given the current market conditions and going by recent events, it is clear that a business model at such high valuations is not sustainable.

“Just because a product has been successful in the past, you simply cannot afford to rest on your laurels and expect the success to continue. The IPL needs freshening up with innovation and general attention to make sure the challenges and opportunities are met. I don’t see too much of that,” Lalit Modi had said in a Hindustan Times column yesterday.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

As per the tender notice, bidders would be required to enter into a new franchise agreement with BCCI. The purchase consideration would be paid into a bank account as decided by the lending banks, with 5 percent payable directly to the BCCI.

Secondly, the buyer will be taking the entire liability of the franchisee but will have to agree to stick to the current branding of the company. Moreover, the new owners will not have the liberty to shift the team’s base to their preferred location. In fact, the tender notice insists that the team should continue to be called Deccan Chargers with Hyderabad remaining their base. The final day of submitting the bid is 13 September and the new owner for Hyderabad IPL team would be announced on 15 September.