Lupa India, the investment company set up by Uday Shankar and James Murdoch, is in the final stages of picking up a 39 per cent stake in Viacom 18, which runs television and digital entertainment channels and is entering the sports business, say sources.
Viacom18 is currently a joint venture in which TV18 controlled by Reliance Industries Ltd, has a 51 per cent stake, and Viacom CBS has a 49 per cent stake. The company runs Color channels, Nickelodeon, India, Comedy Central India, VH1 India, MTV India, History TV 18 besides Viacom 18 Studios (which makes movies and other content), and OTT channel Voot. The news business is run by Network 18 which is a listed company of which TV 18 is a subsidiary. While Reliance’s TV18 will maintain its majority stake of 51 per cent, Shankar-Murdoch will pick up a 39 per cent stake, thereby turning Viacom into a minority player with a 10 per cent share in the company.
Sources say that the Shankar-Murdoch investment arm has made it clear that it has no interest in the group’s news business, and will only invest in the step-down subsidiary. It is also believed that Shankar will play a key role in building the sports business for the JV.
Uday Shankar was unavailable for comment. A spokesperson of Reliance Indistries said: "As a policy, we do not comment on media speculation or rumours, Our company evaluates various opportunities on an ongoing basis."
Shankar has a 51 per cent stake in Lupa India, while James Murdoch holds a 49 per cent stake through his family office. The two had earlier got together to raise $345 million through a special purpose acquisition company (SPAC) vehicle called Seven Island.
Lupa India is expected to invest over Rs 12,000 crore along with Reliance in the sports and entertainment business of Viacom18. However, according to sources, the exact amount to be invested is under negotiations.
Sources close to Reliance say that it has decided to double down in the media business with a strong push in the broadcasting and digital media. It is looking at a large fund raise of over Rs 12,000 crore from financial investors as well as investing its own money. It is roping Uday Shankar and Murdoch not only as strategic partners-but the former will play a key role in building the media franchise.
With two major cricket broadcasting rights up for grabs this year, broadcasting companies are estimated to need a war chest of over Rs 40,000 crore. These include the five-year broadcasting and digital rights for the Indian Premier League (IPL), which begin in 2023, and the auction of rights held by the International Cricket Council (ICC), whose eight-year contract for broadcasting and digital rights for various World Cup championships ends in 2023.
According to estimates by potential bidders, the winning bid for the IPL this time could be double of what Star TV had paid — Rs 16,347 crore — because there are now two more teams and over 14 additional matches.
What’s more, the consolidation in the industry and the entry of new players is going to hot up the bidding war. After its merger with Zee, Sony is ready to make an aggressive bid to wrest IPL back from Disney-Star. Disney-Star, which now owns both the broadcasting and digital rights of the IPL, is also keen to retain them. Reliance, through Viacom 18 and its impending tie-up with Shankar-Murdoch, could make the battle even more fierce. Amazon Prime, too, has shown an interest in making a bid for the rights.
As the former boss of Star India and then Disney, Shankar has played a key role in pushing the broadcaster into sports. It was during his tenure that Star snatched the media and digital rights for the IPL from Sony by paying double the amount that Sony had paid in the first media rights bidding, although for half the number of years. Star also paid Rs 11880 crore to win the bid for ICC tournaments for a period of eight years.