In what will be the largest media deal in India, Multi-Screen Media (MSM), which runs Sony Television in India, is set to buy Ramoji Rao-owned Eenadu TV's (ETV's) bouquet of 11 regional channels.
According to four independent sources, the talks are at an advanced stage and an announcement is expected shortly.
The deal size is expected to be close to $500-600 million (Rs 2,250-2,400 crore), eclipsing transactions such as Disney's strategic investments in UTV, Turner's buyout of NDTV Imagine from New Delhi Television and Viacom teaming up with Network18, which runs India's version of CNBC.
The deal will give Sony a nationwide regional platform to take on rivals STAR and Zee.
Apart from having a pan-India presence, ETV's infotainment channels also reach out to Indian diaspora in the US, providing digital entertainment via ETV Telugu, ETV Bangla and ETV Gujarati entertainment channels.
ETV's regional channels have had an interesting model of clubbing news and entertainment.
The MSM spokesperson said the "company will not comment on market speculation". Eenadu Group's Managing Director and Ramoji's son, Kiron Rao, did not respond to email queries. The group's media officer refused to comment.
E&Y is believed to be advising Eenadu.
Sources in the know say the deal will be in tranches and will allow investors such as Nimesh Kampani of JM Financial to exit.
In 2008, Kampani, one of India's savviest deal makers, came on board of Ushodaya Enterprises, the publisher of the flagship, Eenadu, the largest-selling Telugu newspaper.
Ushodaya also doubles up as the holding company of Ramoji Rao's media empire spanning newspapers and television.
Kampani's structured transaction - which included debt and equity - valued at Rs 2,600 crore (Rs 26 billion) for close to 40 per cent stake had helped Ushodaya wriggle out of another deal the Rao family was planning with private equity player Blackstone Group to sell a 26 per cent stake for $275 million (Rs 1,080 crore).
Ushodaya has three divisions, Eenadu Publications, ETV Network and pickles and food company Priya Foods.
The group has diversified rapidly into film and TV production and distribution, financial services, garment manufacturing and hospitality. It also owns a 1,600-acre Ramoji Film City.
According to analysts, for the nine months ended December 2010, Ushodaya reported a profit after tax of Rs 13.2 crore (Rs 132 million) on an income of Rs 1,062 crore (Rs 10.62 billion). TV contributed 37