Viacom to buy TV18's residual stake in ETV's regional play

TV18, which has option to increase its stake from current 50% to 100%, may allow the JV partner

Viacom, the US media conglomerate that has a 50:50 joint venture with the Raghav Bahl-promoted TV18 Group in India, might buy a 50 per cent stake in ETV’s regional general entertainment channels (R-GECs).

TV18 owns 50 per cent stake in these R-GECs, namely, ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya. It had signed the deal last year with ETV for acquiring the 50 per cent, with an option to to buy the remaining 50 per cent.

It is understood the option is offered to Viacom, which will help getting the channels under Viacom18, which houses the entertainment businesses of TV18.

While some media reports suggest Viacom is conducting a due-diligence, this could not be verified. The Viacom18 spokesperson was unavailable for comment.

If Viacom buys out the remaining 50 per cent stake, both partners would continue to have equal share in the JV. “It is logical for Viacom Inc to buy out the remaining 50 per cent stake in ETV's regional GECs, as it will give the Viacom18 JV a good penetration in the regional space. It will also be good for TV18, which will not need to spend more on acquiring the remaining interest. But Viacom has to look at the price very carefully,” a senior investment banker commented, on condition of anonymity.

Last year, TV18 had entered a Rs 2,500-crore deal to acquire a 50 per cent stake in the R-GECs of ETV, 100 per cent stake of five ETV news channels (ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar and ETV Urdu) and 24.5 per cent in ETV Telugu and ETV Telugu News. News channels, because of government regulations, cannot be a part of Viacom18 (the rules says a foreign entity cannot hold more than 26 per cent in news operations in India).