Sony Entertainment gets high valuation; promoters disagree on certain issues

India's number two private Hindi entertainment television channel Sony Entertainment Television (SET) is believed to have been valued at US$2.5 billion, the leading Indian financial daily The Economic Times reported today.

SET's promoters -Sony Pictures Entertainment (SPE) and a group of Indian entrepreneurs which includes cine star Jackie Shroff - have reportedly divested five per cent of the company's equity in favour of Capital International. Capital International has coughed up US$125 million for the five per cent stake which will be pumped into SET's Indian and Singapore outfits through its Japanese arm Capital Japan. SET has operations in India through SET India Ltd and in Singapore through SET Satellite (Singapore) Pte Ltd.

The US$125 million valuation for a five per cent stake gives SET an enterprise valuation valuation of US$2.5 billion. The promoters had at one stage expected the valuation to be in the region of US$5 billion. One of the promoters had candidly admitted to http://www.indiantelevision.com that that was the valuation about six months ago.

But apparently the downtrend in media stocks in India and the nosedive in the valuation of Zee Telefilms Ltd - which has seen its market capitalisation evaporate to one fourth of what it was in the early part of this year - led to a lower valuation for SET.

The newspaper says that there was disagreement between the Indian promoters and SPE on the modus operandi of divestment. Capital Japan was believed to be in favour of an early exit through an initial public offering (IPO) within a year of it taking a stake in SET. SPE, however, was against any commitment on the timeframe for an IPO.

SET, the newspaper says, convinced Capital Japan to extend the timeframe to 24 months. SPE, apparently, is believed to be unhappy about this also.

However, that' s an issue which will be resolved over time. For the nonce, SET India can be happy that it has managed to get some funds in its kitty which will go a long way in its battle with market leader Zee TV.

None of the officials in SET India or its promoters were willing to comment on the The Economic Times newsreport.

See more headlines