Radio City

The length of the COVID-19 crisis and the strength of balance sheets and cashflow will determine the intensity of the bloodbath in the media and entertainment industry

The Initial Public Offer (IPO) of equity in Music Broadcast (MBL), owner of leading radio brand Radio City, will enable the company to improve its balance sheet and become leaner. Of the up to Rs 489 crore of issue proceeds, Rs 400 crore will flow into MBL, the rest being an Offer for Sale. The company will repay most of its Rs 300 crore debt through these funds, reducing its interest cost and improving the overall cash flow. The Radio City brand enjoys leadership position in most markets and MBL has a healthy operating profit (Ebitda or earnings before interest, taxes, depreciation and amortisation) margin of a little over 30 per cent. Its strategy of capturing the number one or two slot in bigger cities will enable it to continue garnering a high share of advertising revenue. While there is healthy visibility on its revenue growth and margins, the issue's pricing leaves little room for gain in the near term. Its only listed pure-play radio company, Entertainment Network or ENIL, ...

Currently, the company has 39 stations under 'Radio City' brand, which includes 11 stations acquired in Phase III auctions