Media watchers say the deal will prove beneficial for Viacom18, as Shankar and Murdoch not only bring funds, but also their expertise in running a large media company.
Uday Shankar, ex-CEO of Star India, and his former boss James Murdoch, who was the CEO of 21st Century Fox, are re-entering the television broadcasting business in India. The duo, who together run a joint venture (JV) called Lupa Systems, are eyeing a major stake in Viacom18, which is currently India’s fourth-largest television network by revenue.
According to an article in a major English business daily, the two executives plan to acquire a 40% stake in the media network, which is a 51/49 joint venture between Reliance Industries and ViacomCBS. While Reliance will continue to hold a majority stake in the company, ViacomCBS will be diluted to 10%. The report further states that the deal will see Shankar and Murdoch inject Rs 12,000 crore into Viacom18 with the primary fund injection constituting the bulk of the investments. This deal will value the company at Rs 30,000 crore.
Media watchers say the deal will be beneficial for Viacom18, as Shankar and Murdoch will not only bring funds, but also their expertise in running a large media company. They also say Viacom18’s sports business will get a significant boost, especially as both Shankar and Murdoch are firm believers in the power of cricket and sports.
“Viacom18 will be a big contender for IPL and other cricket rights. The entry of Uday Shankar and James Murdoch will give Viacom18 a major boost. Uday’s experience will be invaluable to Viacom18. Currently, Viacom18 ranks third after Star and Zee-Sony, but it will seek to increase its presence in the market,” said Kunal Dasgupta, Founder and CEO of Triplecom Media iTap. ViacomCBS might not like India as they have their own problems in the United States, he added.
A seasoned media watcher said it would be interesting to watch Uday Shankar’s role in Viacom18. “It will be interesting to see what Uday Shankar’s exact role will be in Viacom18. Whether Uday will run the Viacom18 business operationally or not is the main question, as what he brings to the table is his expertise in running a media empire. If you look at the Zee-Sony deal, Punit Goenka will continue to be the Managing Director and CEO despite Sony having a majority stake. A similar arrangement is possible between Uday and Viacom18,” the executive explained.
He also noted that the development highlights that ViacomCBS does not see India as a key market. “ViacomCBS would have felt that it was not worth investing billions of dollars in cricket rights. If IPL demands an offer of Rs 40,000 crore, that is a huge commitment, with which ViacomCBS would not have been internationally, ViacomCBS has its own priorities as they work closely with Comcast to build a global streaming business,” the executive said.
A senior executive at a major media company said Viacom18 had been looking for strategic partners for some time. Previously, the Reliance-owned company held talks with Sony for a possible merger deal which did not go through. “They’ve had discussions with Sony, but that didn’t materialize into a deal. With the arrival of Uday and James, they finally have a strategic partner on board. The new investors will buy secondary shares from ViacomCBS , then they will bring money to the company,” the official said.
The deal follows a merger between Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Limited (ZEEL). The Sony-Zee deal has created a media giant with a strong presence in the TV, digital and cinema segments. With most media companies looking for scale, Viacom18 surely didn’t want to be left behind in the game.
2022 looks set to be a ‘breakthrough’ year for big media companies like Star India, Sony-Zee and Viacom18 as media rights to the Indian Premier League (IPL), International Cricket Council (ICC) and possibly the BCCI. are to be renewed. All three properties are currently owned by Star India, which is now owned by Disney. Shankar, with Murdoch’s backing as CEO of 21CF, had made Star Sports the birthplace of cricket after entering the sports business in 2012.
Viacom18 recently ventured into sports broadcasting with the appointment of former Star Sports Ad sales manager Anil Jayaraj as the division’s CEO. The buzz in the market is that the network plans to launch Sports18 and Sports18 HD in a few weeks. The network has acquired rights to properties such as the FIFA World Cup, La Liga, Serie A, Ligue1, NBA and the Abu Dhabi T10 series. It is also a strong contender for IPL, ICC and BCCI media rights.
Viacom18 owns and operates 46 channels that cover 80 countries in eight languages. It is present in the Hindi GEC space and in niche genres such as Youth, Children and English GEC. In the Hindi GEC space, it operates channels such as Colors, Colors HD, Colors Rishtey and Rishtey Cineplex, while it has a presence in the English GEC segment through Comedy Central, Vh1 and Colors Infinity.
While in the youth genre it has channels like MTV and MTV Beats, in the kids genre the portfolio is represented by channels such as Sonic, Nickelodeon and Nick Jr. In the regional category, it operates entertainment channels in Marathi, Bengali, Gujarati, Odia, Kannada and Tamil markets.
For the fiscal year ended March 31, 2021, Viacom18 Media reported a 65% growth in net profit to Rs 582.89 crore from Rs 353.54 crore for FY20. The company’s operating revenue fell by 15.37% to Rs 3,276.32 crore for the year under review from Rs 3,871.65 crore.