When Adhikari brothers floated Sab TV, they had the vision of growing from a pure content to a broadcasting company. But facing competition from biggies like Star Plus and Sony TV, they quickly took the niche positioning of a comedy channel. But lacking resources to push growth, the Adhikaris initiated talks with Sony Group for a buy out.

Extensive negotiations over the last six months culminated in the announcement today that SET Satellite (Singapore) Pte Ltd was acquiring from Sri Adhikari Brothers Television Network Limited (SABTNL), the Sab TV brand as well as 1305 hours of library content (representing 20 per cent of Sab TV's library). The price: $ 13 million (approximately Rs 570 million).

Indiantelevision.com's Sibabrata Das caught up with SABTNL vice-chairman and managing director Markand Adhikari for a quick lowdown on the ramifications of the deal.

Why did you sell Sab TV when it had established its position as a niche comedy channel?
Running a general entertainment channel is an expensive affair. The annual operating expense was around Rs 300 million. We were getting revenues close to that. Though we were in an operating break even position, it was difficult to grow further with it.

How will the Sony buy out of Sab TV affect SABTNL, the listed company?
The bottomline will increase significantly as we are de-risking SABTNL from the broadcasting business. And on the content side, we stand to profit as we have a five-year supply deal with SET India for a minimum guarantee amount of Rs 750 million.

Does this mean that for your future broadcasting projects, SABTNL will not have any equity ownership?
SABTNL will be a pure content company. The two new channels that we are planning to launch by May will be entirely held by the promoters. And SABTNL will be handling the programming and ad sales for the channels. This will ensure a captive content supply for SABTNL.

With SABTNL not having content on the Doordarshan network of channels, how much do you expect the company to gain from these captive contracts?
The minimum that we will get from SET India is Rs 150 million a year for fresh content that we will produce for them. We expect the two new channels will further contribute a revenue inflow of Rs 150 million. The exploitation of our library will add up another Rs 50 million. We also expect to get revenues from Doordarshan. We, in fact, are targeting a turnover of Rs 600 million in the next Fiscal.

SABTNL will have a cash inflow of Rs 570 million to acquire the SAB TV brand and 20 per cent of the library. How much will be spent towards clearing the company's debt? What are the other areas SABTNL will invest in?
SABTNL has a debt of Rs 150-160 million. We will clear that so that we become a zero debt company. This will go towards strengthening our bottomline. We will also use the funds to create and upgrade the infrastructure required for content production. This will include studios and post production facilities. We are also getting into animation content.

When will Sony take complete control of Sab TV?
The handholding will be complete within a month.

What is the paid up capital for these two companies?
For the news channel, the paid up equity is Rs 30 million. We are awaiting uplinking clearance for the news channel. We haven't finalised the paid up capital structure for the regional channel.

How much are you investing?
We plan to invest Rs 200 million towards the news channel, Janmat, and Rs 100 million on the Marathi channel, Mi Marathi. We will start with three hours of fresh programming and one hour of news on Mi Marathi. We have a library of 3,000 hours of Marathi language content and as our programmes were already beaming on DD's Marathi channel, the regional viewers are familiar with our brand.