NBC Universal Is Exiting NDTV Networks; Who Will Come In?

Broadcaster NDTV Ltd will buy back a minority interest in its non-news subsidiary NDTV Network Plc. from NBC Universal (NYSE: GE). The company had sold a 26% stake in the UK-incorporated subsidiary, which acts as a holding company for the group’s non-news businesses, to the American media conglom in May 2008. The transaction last year happened at $150 million. The price at which the stake is being bought back is unknown as yet.

At the time of writing, NDTV scrip was up 3.17% at Rs162.50 while the benchmark Sensex was down 0.03% on the Bombay Stock Exchange.

The timing of NBC’s exit comes as a surprise. Mint reported recently that NBC was talking to buy a greater stake in NDTV Networks. Sameer Nair, CEO of NDTV Imagine, in fact went on the record with Mint and said NBC was in talks to acquire a majority stake.

According to our sources, the two companies were talking to do a restructuring of the holding, under which NBC would get more stake in NDTV Imagine, and less in other businesses under NDTV Networks. Either way, the talks seem to have broken down. Sources say the talks eventually broke down over the valuation and NBC’s commitment (the lack thereof) to invest more money in the business in the near term.

Our sources also say that NDTV will bring in another strategic partner in the place being vacated by NBC Universal. However, early 2008 and 2009 are very different times as far as valuations go.

We have reported in the past about NDTV’s talks with two potential partners–Time Warner and E.W. Scripps. Sources say the company may be in talks with more parties and indications are that a deal is more or less firmed up and will be unveiled in a few months.

NDTV CEO Narayan Rao declined comment, saying the company doesn’t comment on market speculation and that it had nothing to say at this stage beyond the communication to the stock exchange.

Through the holding, NBC held interests in NDTV Imagine, a general entertainment channel that was recently in the news for its controversial reality show “Rakhi Ka Swayamvar”. Apaprt from NDTV Imagine, clearly the most important piece in the business, there were some synergies with NDTV Convergence, the company’s digital unit. NBCU’s digital unit helped relaunch NDTV.com.

Time Warner (NYSE: TWX) has interests in GEC Real through subsidiary Turner, which launched the channel under a JV with India’s Miditech. It recently said the channel was “scaling down” operations.

The full structure of NDTV’s businesses is here, courtesy IDFC SSKI Research (click to enlarge):