Half of India MTV unit sold

TV 18 to pay $50.5 mil for MTVNI

NEW DELHI -- TV18 is set to buy half of MTV Networks India for $50.5 million (2 billion rupees) after the Indian government approved Friday the investment by the diversified Mumbai-based broadcaster in the property of U.S. media giant Viacom.

The development expands the partnership between TV 18 and Viacom, which in May became an equal joint venture called Viacom-18 (HR 5/22).

On Friday, the Ministry of Finance's Foreign Investment Promotion Board (FIPB) approved TV18's application to pay 2 billion rupees in exchange for 50% equity in MTVNI, the New Delhi-based body said.

MTVNI, which was registered in 2000 as a fully-owned subsidiary of parent MTV Networks, runs flagship channel MTV India, kids channel Nick India and international music channel VH1. MTVNI is owned by Mauritius-based holding company MTV Mauritius.

TV18 will invest in MTVNI via its Mauritius-based entity BKH Holdings.

On Friday, the FIPB also allowed TV18 to make annual royalty payments to Viacom Inc amounting to 2% of net revenues of MTVNI for use of Viacom brands. In addition, TV18 would pay 1% of net revenues for technical assistance and consultancy services to be provided by Viacom Inc to MTVNI on an ongoing basis.

However, it is not clear whether TV18's $50.5 million investment for a 50% stake is a reflection of MTVNI's total enterprise value.

When contacted, MTVNI officials offered no comment on the question while TV18 CEO Haresh Chawla said in an interview, "I am afraid we are not reacting to any news reports at the moment. We'll be able to reply to your questions at an appropriate time."

The FIPB statement said that TV18's proposal was among 17 for foreign investment totaling $1.4 billion (5.75 billion Rupees) across various industry segments -- ranging from telecom to petrochemicals -- cleared in a July 27 meeting by Finance Minister P. Chidambaram.

Viacom-18 is also prepping the launch of a new general entertainment channel while on the film front, TV18's film subsidiary Studio 18 and the recently launched Indian Film Co. are developing various projects. The IFC -- in which Viacom Inc is also an investor -- listed on London's Alternative Investment Market in June (HR 6/6) where it raised $109 million (£55 million) to be used to fund a slate of movies.