SPT to buy out 30 per cent stake in Maa TV

Sony requires a very strong long term vision to turn this decision into a profitable investment, say experts.

Sony Pictures Television (SPT) has entered into a strategic alliance with Maa Television Network to acquire a 30 per cent stake in the latter in a bid to set foot in regional television.

For the record, Hyderabad-based Maa Television Network operates four Telugu television channels - Maa TV (flagship Telugu general entertainment channel), Maa Movies, Maa Music and Maa Gold (a second GEC from the stable that focuses on urban and youth audiences).

The strategic alliance will enable SPT or any of its affiliates to acquire the stake on signing the Definitive Agreement, subject to necessary approvals from the concerned statutory authorities. The majority shareholders of Maa Television Network and SPT have signed a Letter of Interest (LoI) to this effect.

Actor-turned-politician K Chiranjeevi, his brother in law Allu Arvind, actor Nagarjuna Akkineni and entrepreneur N Prasad are the four main promoters of Maa Television Network. Together, they currently control approximately 95 per cent of the company's equity capital.

When quizzed on the move, Manjit Singh, CEO of MSM India, Sony Pictures Television's Indian operations, tells afaqs!, "The Telugu television business is big and has been growing rapidly in terms of both advertising revenues as well as subscription. And, Maa TV has been rising steadily in this market and is the No. 2 network in Andhra Pradesh. Also, Maa TV works under an excellent management force and its strategy fits very well with ours."

Evidently, with its flagship GEC (India operations) comfortably stable at the second spot, Sony TV has placed itself as a strong network in the Hindi television market. Also, the networks' second GEC, SAB TV, leads amongst the second rung GECs while Pix, the English movie channel, has been trying hard to put forth a steady performance.

Furthermore, with the IPL in its kitty, SET Max (the movie channel and official IPL broadcaster), too, poses significant competition to the other television players in the market. SPT also operates in the music genre with Sony Mix and in the sports genre (apart from IPL) with Sony Six. However, unlike its contenders, the network, as of now, does not have a regional presence. While both Zee and STAR have strong regional presences, Network18 and TV18 announced their foray into the regional TV space with the acquisition of the ETV Group channels in January this year.

So, is this a good move for Sony?

There is almost a unanimous agreement that Sony's decision to enter the regional TV space is just at the right time. Many note that unlike Tamil Nadu and Karnataka, the Andhra Pradesh television market is highly fragmented and stands to be a 'better bet'. Also, since regional television is heavily dependent on local advertisers, they are sometimes 'recession proof', which makes them a good investment destination for national players.

Hema Malik, vice-president, Lodestar UM India, says, "Andhra Pradesh is a very strong regional TV market and is more stable. Also, the dominance of Sun TV is much less here. Sony's entry into the regional space was inevitable and, since Maa TV has a pretty decent hold in the market in terms of content and distribution, the move seems to be a good decision for now."

Prabhakar, head, CMS Media, however, explores a different view. Consolidation has been the ongoing phase for the Indian television industry and according to him, Sony is at a very comfortable position right now; nevertheless, it needs a very strong long term vision to turn this decision into a profitable investment, he says.

"As Sony decides to foray into the regional TV space, it has to contend with players such as Zee, STAR and Sun TV, all of whom are well established players in the regional domain and will emerge as strong contenders in the future. In the past, there have been events when Sony has had a directional loss. And therefore, it will have to have a very strong plan in place to emerge as a strong regional player," he says.