Sun TV expects to get approval for FM radio business

The company has invested an aggregate of Rs 620.2 cr in FM radio business

Kalanithi Maran-owned Sun Television Network (Sun TV) said that it is confident on receiving approvals from the Centre for its FM radio business, in which company invested around Rs 620.20 crore. Earlier, the Ministry of Broadcasting of the Government of India has refused to accept its applications and the issue was a matter of dispute in various courts.

The Group companies have earlier submitted applications to migrate their existing FM Radio licenses including six expired on March 31, 2015 and others expiring on various dates in 2016-17, from Phase II to the Phase III licensing regime along with applications for participating in the e-auction process for new FM Radio frequencies in the Phase III licensing regime.

"The company has direct/ indirect investments in FM Radio operations aggregating Rs 620.20 crore, the recoverability of which is dependent upon maintaining profitable operations", said Sun TV.

"The management is confident of receiving the required approvals in respect of the applications by the Group which would enable them to continue the operations of the FM Radio business profitably resulting in the recoverability of the Company's investments both direct and indirect," it added.

While the Ministry of Broadcasting has refused to accept its applications pointing out that they did not get a security clearance from the Home Ministry, the Group approached both Madras High Court and Delhi High Court for remedy and received favourable orders.

The Madras High Court, on June 14, 2016, has set aside the impugned orders of the ministry, dated July 15, 2015, which rejected the the applications. 

Consequent to an earlier favourable order from the High Court of Delhi, which was also upheld by the Supreme Court, two investees have since signed the GOPA for the three new licenses, and have also operationalised one of the FM stations, namely Mumbai. All the three investees have also migrated the existing stations to Phase III licensing regime, in the current quarter, it added.

On a case related to Enforcement Directorate against one of its subsidiaries South Asia FM Ltd (SAFM), Sun TV said with reference to the Provisional Attachment Order (PAO) under PMLA, the Company has filed a Special Leave Petition (SLP) challenging the said Order before the Supreme Court which has stayed the adjudication proceedings under the PMLA and accordingly the entities continue to be in full possession of these assets.

"Based on legal advise, management is confident that the said PAO is not legally tenable and is confident of a favourable outcome in due course and, accordingly, is of the view that no accounting adjustments are considered necessary in these financial results in this regard," said the media Group.

It may be noted last year SAFM received an order from the Enforcement Directorate provisionally attaching certain Freehold Land and Buildings of the Company aggregating Rs 266 crore and fixed deposits with banks and mutual fund investments of SAFM aggregating Rs 21.34 crore, under the Prevention of Money Laundering Act, 2002 (PMLA) in connection with an investigation not involving the Company.

Sun TV Network Ltd has posted a growth of 19 per cent in net profit at Rs 233.06 crore during the quarter ended June 30, 2016, as compared to Rs 195.82 crore of net profit reported during the same period of previous fiscal year. The total income from operations grew by 10.3 per cent to Rs 760.83 crore during the quarter, as against Rs 689.45 crore registered during the corresponding quarter of last year.

The company said that its subscription revenue has grown at around 22 per cent to Rs 232.13 crore during the quarter, with cable TV revenues growing by around 37 per cent and Direct-To-Home subscription revenue growing by around 16 per cent over the same quarter of last year.