Business Today

Modi set on MSM

Has B.K. Modi got a toehold into the Sony bouquet? The buy-out has been apparently made via Mcorp Global, the holding company for Modi’s businesses.

     Print Edition: July 13, 2008

It has all the elements of a potboiler. Business baron Bhupendra Kumar Modi, who appears on the verge of selling his stake in group company Spice Telecom to the Aditya Birla Group, has now trained his sights on the media and entertainment sector. He claims to have roped into a “binding agreement” the individual Indian stakeholders who own 32 per cent in Multi Screen Media (MSM), which broadcasts channels such as Sony Entertainment Television (SET), SET MAX and SAB TV. Of course, Kunal Dasgupta, CEO, MSM, claims he is “unaware of such a development.

As far as I know, this has not happened,” he told BT. But top sources in the B.K. Modi camp insist that an agreement on these lines has been reached. To be sure, this isn’t the first time that unrest amongst the original independent Indian stakeholders of MSM has surfaced. These shareholders got together in the mid-nineties with Sony Pictures Entertainment, US, to form Sony Entertainment Television India Ltd (SET India Ltd), and launched a general entertainment channel by the same name. SETL has since been renamed MSM.

The Indian investors include actor Jackie Shroff; Singapore-based banker Rakesh Agarwal; Raman Maroo, Managing Director, Shemaroo Entertainment; Jayesh A. Parekh, Chairman, MobiApps Holdings; Sudesh Iyer, Director, World Media Group; and B.R. Sule, a former Managing Director at Mahindra & Mahindra. Sony Pictures owns 60 per cent in MSM. US-based private equity firm Capital International had bought an 8 per cent stake from the Indian investors for $200 million way back in 2000. At that price, MSM then was valued at $2.5 billion.

The attempt for long has been to either get the company listed— an option that Sony Pictures has ruled out—or to offload it to another investor. Insiders at the B.K. Modi group let on that an average price of Rs 40 per share has been fixed for the transaction, and that they have already agreed to pay $320 million as a “part-payment.”

The buy-out has been apparently made via Mcorp Global, the holding company for Modi’s businesses. Attempts to reach the investors were futile, with actor Jackie Shroff claiming no knowledge of the exact nature of developments or the party involved.

According to reports, Modi’s pricing formula brings down the value of MSM to around $1 billion since eight years ago. Yet, what would have given MSM’s valuation a boost is the recent coverage of the first series of the Indian Premier League, for which MSM has acquired media rights for five years. The big question, however, is: has Modi really pulled it off? Those familiar with the transaction expect it to be concluded by end-June, and announced in mid-July.

Shamni Pande

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