Sony Entertainment to step into stock market

Sony Entertainment Television, SET India, is looking at expanding its market - from viewers to investors - and the first sign is its advertising on a business channel. Sony is apparently looking at raising money through the capital market but only after a corporate restructuring for tax and content benefits. Set India and Set Singapore will merge into one company through a share- swap deal. While SET India was considering an IPO after the restructuring, for now the plans are on hold as the markets are turning bearish.

 

So, why is Sony thinking of an IPO? For one, the money would help them buy better content, pitch aggressively for sports broadcast rights and acquire regional channels. It would also allow Indian promoters like banker Rakesh Agarwal, Shemaroo Films Managing Director-Raman Maroo, World Media Group Director-Sudesh Iyer and Mobiapp's Holdings-Jayesh Parekh, who together hold a 32% stake to use the IPO as an exit option, something they have been looking to do for the past one and a half years.

 

When contacted, SET India refused to comment. The news of an IPO comes at a time when the driver channel Sony TV is dipping in ratings. It's now fallen below competitors Star and Zee, because hyped shows like Jassi and Indian Idol have ended. Revenues though, are still riding on these shows and have gone up to Rs 350 crore this year.

 

Acquiring Set Singapore could boost Set India's market worth because of international programming and sports content. SET Singapore is also officially the rightsholder to the ICC matches till 2007. This includes the Championship Trophy coming up in September this year, and the cricket World Cup next year. Two big-ticket sporting events that could give Sony the leverage it needs, to enter the market on a high note.

 

Group CEO, Madison Media, Punitha Arumugam told CNBC TV18, "What will going public do for a broadcaster like Sony. Firstly, it will give them money - to buy content, to buy rights, to buy other channels, which will then mean better ratings and viewership. As a media agency and viewer, it makes no difference if the broadcaster is listed or not. But getting the money from the capital market will allow them to spend more on acquiring better content, which helps them in the long term."

 

Despite an overall dip in the general entertainment category, rival networks have been aggressively marketing their shows and retaining marketshares. While Star Plus, has a 60% marketshare, Zee's rising ratings on its flagship channel and higher network earnings have dislodged Sony from the strong number 2 spot it maintained for the past three years. Even second rung entertainment channels like Star One, Zee Cinema and now Sahara One have risen above Sony intermittently.

 

The main chink in Sony's armour could be its distribution. While it has formed a distribution alliance - called One Alliance, Sony does not own nor is it affiliated to last mile connectors like MSO's or a DTH business. Which is why Sony's five channels comprising Sony, Set Max, AXN, SAB and Pix is still ironing out distributions problems for its recently launched channels.

 

With the loss of key senior management this year, Sony could also leverage an IPO to attract and retain the best talent in the business. Majority stakeholder, Sony Pictures is said to have given SET a go ahead with its plans. The new worldwide CEO, Howard Stringer, on his maiden trip to India last year had emphasised that India was a focus market for Sony. It is only apt then, that SET India will become the first Sony entertainment and broadcasting business, to list on the stock exchange.

 

Ramya Ramamurthy