Sony to buy SAB TV channel for $13 mn
Sri Adhikari Brothers Television Ltd. (SAB) will use the proceeds to upgrade studios and production and post-production facilities.
Indian broadcaster SAB TV said on Monday it would sell its TV channel and related assets to Sony Entertainment Television Satellite, Singapore, (SET) for $13 million, and focus on its core production facilities.
Sri Adhikari Brothers Television Ltd. (SAB) will use the proceeds to upgrade studios and production and post-production facilities and set up an animation division.
"There is fierce competition in the general entertainment segment. The company will gain more from focusing on its core competence of content production," said Markand Adhikari, a managing director at SAB TV.
SAB, which began as a content producer, operates SAB TV, a Hindi entertainment channel positioned as a "humour" channel.
The deal includes 1,305 hours of programming from SAB's content library. Separately, SAB will provide programming for Sony Entertainment India Pvt. Ltd. for 750 million rupees.
Shares in SAB fell as much as 4.3 percent to 110 rupees ($2.5) by mid-afternoon in a slightly weak Mumbai market, as investors had expected a higher price, but the deal is favourable for SAB TV, analysts said.
"A standalone channel does not have much of a future, as it lacks deep pockets and does not have bargaining clout with distributors and cannot hope to increase its subscription revenues," said Apurva Shah, an analyst at ASK-Raymond James.
The deal gives SAB another chance to make a mark in content production, an area that has come to be dominated by Balaji Telefilms Ltd., said Shah.
"They already have a reputation as a content maker, and the deal gives them a chance to forge a relationship with Sony, similar to the one that Balaji has with Star," he said.
News Corp's Star Group last year bought a 21 percent stake in Balaji for 1.23 billion rupees ($27 million), taking its holding in the Indian firm to 26 per cent. Balaji is Star India's dominant content provider.
Sony, the No. 2 broadcaster in India behind Star, operates two Hindi entertainment channels, besides an animation channel and an English entertainment channel. This deal could result in SAB being the preferred content provider to Sony, said Shah.
SAB shares had risen about 6 per cent this year, before the lastest announcement, on expectations of a stake sale to Sony. Last year, Sony had said it would buy a stake in SAB TV and distribute it exclusively.
SAB will also provide content for a news channel and a regional-language channel, to be launched by SAB's founders.
UTV Software Communications Ltd., another major content producer which recently launched a children's entertainment channel, also provides content to Star. UTV, whose channel is on the Star platform, also produces and distributes films.
UTV has raised nearly $21 million from an initial public offering of nearly 7 million shares.
