Radio City is now a Jagran company

17 Dec,2014


By Sandeep Puraname


It was an Ispat group and  Star India-funded station. And then private equity player India Value Fund Advisors bought a controlling stake in radio station network Radio City. But PE companies normally do not have much of a long-term emotional tuning with their investments. So, after ensuring that Radio City delivers with some success, they’ve sold the station and allied ventures to Jagran Prakashan.


Subject to government approvals, Radio City will be a Jagran Prakash Limited subsidiary. Music Broadcast Private Limtied (MBPL), the company that owns Radio City, will be run independently by its board, and for the now, it’s business as usual.  More importantly, Apurva Purohit will stay as CEO.


With reason: Radio City has demonstrated good revenue growth combined with a strong operating performance, current EBITDA margins of 28% approx will positively impact JPL’s operating margins, according to a communiqué.


Radio City is a leader in the FM radio sector with a presence in 14 of the top 16 advertising revenue generating markets of the country. It has 20 stations across seven states. MBPL’s FY14 revenues were Rs 161.8 crore and the H1-FY15 (unaudited) revenues exhibit healthy growth of 28% in ad revenues.


Although it’s being touted as JPL’s entry into radio, the fact is that the promoters of the Jagran group made an entry into radio with stations in Tier 2 and Tier 3 India way back in 2007. Radio Mantra has a presence in eight markets, and will be merged into MBPL eventually, in fact in this financial year itself.


The acquisition, which happened through an all-cash deal, is expected to provide strong return on JPL’s invested capital. The foray into the high growth radio media segment which is increasing its share of advertising expenditures in India. This ensures that save news television, a sector it exited after it sold most of its stake to Network 18 some years back, Jagran Prakashan Limited has an exposure to all media domains.  According to a senior executive, there are no plans to invest in News TV, as it continues to feel that it is an unprofitable investement.


On Tuesday, the board of Jagran Prakashan Limited (JPL) approved the entry of the company into the radio industry via acquisition of Music Broadcast Private Limited (MBPL). The acquisition is subject to regulatory approvals, including from Ministry of Information and Broadcasting, and execution of binding agreements. As part of acquisition the company is acquiring MBPL’s holding company and fellow subsidiary that provides activations.


Said Mahendra Mohan Gupta, CMD, Jagran Prakashan Limited: “The radio business has witnessed significant growth in recent past and is expected to grow at more that 18% CAGR in the coming years, per KPMG FICCI, This deal will catapult JPL into a leadership position in the radio industry and enable the company to benefit from the rapid growth in radio advertising. Acquisition of Radio City further consolidates our position as India’s leading Media and Communication Group. The radio business will complement our print, outdoor, activation and digital businesses and enable deeper inroads with advertisers both at national and local level.”


Talking on the announcement, Apurva Purohit – CEO, Radio City 91.1 FM said, “JThis augurs well for all stakeholders. Both Jagran and Radio City have been pioneers and leaders in their respective space and this partnership will help augment the growth aspirations of the brand. We look forward to exciting times ahead.”


As part of acquisition the company is acquiring MBPL’s holding company and fellow subsidiary that provides activations. The acquisition will primarily be funded from internal accruals and investments. This acquisition will not impair the company’s ability to distribute dividends.


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