Indian Billionaires Consider Competing for Stake in TV Network

(Bloomberg) -- Billionaires Mukesh Ambani and Sunil Bharti Mittal are considering competing bids for a stake in a troubled Indian television network, people with knowledge of the matter said, as their telecom carriers race for content in the world’s second-biggest mobile market.

Mittal’s Bharti Airtel Ltd. has started due diligence of Zee Entertainment Enterprises Ltd. and is expected to make a formal proposal soon, one of the people said, asking not to be identified citing confidentiality. Ambani’s Reliance Jio Infocomm Ltd. is also considering a bid, the people said. Deliberations are preliminary and may not lead to a transaction, they said.

A representative for Zee said the company doesn’t comment on speculation though it is in “steady dialogue” with potential partners. A spokesperson for Bharti said the company is not in the race to acquire the television network.

Reliance Jio Infocomm did not immediately respond to emails requesting comment.

A successful deal would help the winning bidder add a slew of video services in the scramble for user revenue as the government prepares to auction 5G airwaves this year. Some of the world’s largest telecommunications companies including AT&T Inc., Vodafone Group Plc and KDDI Corp. have been buying film and television production and cable TV assets to bolster earnings as subscribers level off.

Bidding for such assets has accelerated as entertainment providers themselves gather content to offer programming via the Internet and compete with upstarts like Netflix Inc. and Inc.’s Prime service.

India Media Giant Rocked by Claims of Ties With Fraud Probe

“The objectives of the telcos will not be necessarily to own Zee, but have adequate strategic stake so as to play into the distribution opportunity on their high-speed networks,” Mumbai-based Alok Shende, principal analyst at consulting firm Ascentius Insights said. Interest in Zee “is reflective of the triple play opportunity that is unfolding in the Indian market,” he said, referring to the ability of mobile players to bundle carriage, content and commerce on a single platform.

Shares of Zee climbed 3.2 percent in Mumbai on Thursday, leading gains in the S&P BSE 100 Index, paring the past year’s drop to 27 percent. Reliance Industries Ltd., Jio’s parent company, declined 1.6 percent while Bharti rose 1.9 percent.

Content Play

Zee, the broadcaster controlled by former rice trader-turned-media mogul Subhash Chandra, is seeking a strategic investor to help pay off debts of its parent group as well as fend off competition from Netflix, Amazon and hundreds of local TV channels vying to tap India’s booming demand for content.

Zee, which boasts 1.3 billion viewers across 173 countries through its 78 channels and 4,800 movie titles, has previously attracted interest from Sony Corp. and Comcast Corp. but hasn’t found a buyer yet. The television network has offered to sell half of the controlling family’s shares, of which 59 percent is pledged as collateral to lenders.

Jio stormed the market in 2016 with free calls and cheap data and forced some rivals to retreat or merge. Bharti, once No. 1, has been relegated to second position after Vodafone’s local unit combined with billionaire Kumar Mangalam Birla’s Idea Cellular.

War Chest

While Bharti has been adding some digital services to its portfolio, such as apps for e-books and music, its scale hasn’t matched Jio, which already offers a bouquet of services including Saavn, a music app, television, news and movies.

In February, Bharti revealed plans to raise as much as 320 billion rupees ($4.6 billion) from a rights issue and bond sales to build a war chest as competition with Jio intensifies. Last year, Bharti entered into a content deal with Zee for exclusive videos on Airtel applications.

Bharti and Singapore Telecommunications Ltd. plan to make a combined offer of about 61.5 billion rupees to acquire about 60 percent of Dish TV India Ltd., CNBC-TV18 reported on Thursday, citing people it didn’t identify.

©2019 Bloomberg L.P.

Click here to subscribe to WhatsApp updates from BloombergQuint
Stay Updated With Business News News On BloombergQuint

You have reached your free articles limit.

Here's your 30-day free access to exclusive BQ BLUE stories powered by insights from Bloomberg.

To continue, please pay Rs.149 for the article or subscribe for access to unlimited stories on BQ BLUE.

Subscribe to BQ Blue for unlimited access at Rs.48 per week.