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Bullish on the private FM radio business, Rupert Murdoch's Star group will pick up 20 per cent equity in radio company Music Broadcast Pvt Ltd.
"Star has decided to enter the fast-growing FM radio business in India and will be picking up a 20 per cent stake in MBPL from India Value Fund (IVF)," a senior company official told PTI.
The official said the two companies had "technically approved" the deal "and now Star would be seeking government nod" to make the investments.
"Star will be approaching the FIPB to seek permission for making the investments," the official said, though refusing to divulge details on the transaction and the valuation of MBPL.
MBPL, which runs its radio service under the brand 'Radio City', is operational in major cities like Mumbai, Delhi, Bangalore, Lucknow, Hyderabad, Chennai and Jaipur.
The company also won licences in the second round of FM radio bidding and has plans to launch services in cities like Nagpur, Surat, Ahmedabad and Baroda.
This will be Star's second coming in the Indian FM radio business, after its stint with MBPL earlier where it was responsible for content supply and ad-sales, though without putting in equity.
Star did not have any stake in the company at that time as the government had not opened the sector to FDI. However, with the government allowing 20 per cent equity in private FM radio as well as laying down a favourable policy regime, in the form of a revenue share regime, Star has made a comeback in the segment through equity participation.
IVF, a venture capital fund, currently holds 75 per cent stake in MBPL while the Ispat group has 25 per cent. After Star's entry, IVF's stake in the company will come down to 55 per cent.
Asked on the potential of the private FM radio segment, the official said, "It holds a good potential and we are optimistic."
The official said "there will be no change" in the management of MBPL. "We want it to run in the way it is running now and there will be no change in its management," the official said.
Asked whether the company would play a greater role in content supply and ad-sales, the official said, "We would not be doing ad-sales this time. However, we will look at synergies in other areas."
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