Scripps Networks Acquires 69 Percent Stake In NDTV Lifestyle For $55 Million

Indian broadcaster NDTV Ltd and US-based Scripps Network Interactive today said they were forming a strategic alliance in the lifestyle broadcasting space in India.

As part of the deal, Scripps will acquire 69 percent stake in NDTV Lifestyle Ltd, with the NDTV Group retaining the rest. Scripps will pay $55 million for the holding, which values the one-channel company at $79 million. The company currently broadcasts lifestyle channel NDTV Goodtimes. The companies propose to launch more channels under the joint venture, they said in a statement.

We reported in September that Scripps and NDTV were in talks for a strategic partnership.

NDTV Lifestyle is 100 percent owned by NDTV Networks Plc., a UK-incorporated subsidiary of NDTV Ltd. NDTV Networks recently bought back a 26% stake from NBC Universal (NYSE: GE).

In a separate announcement, the company said NDTV Networks has bought back coupon bonds worth $100 million from unnamed funds that were due in 2012. The bonds were underwritten by NDTV Ltd and have been bought back at $72.4 million. The buyback has been financed through bank loans.

NDTV reportedly paid $25 million to NBCU to buy back a 26 percent stake, which was bought by the latter a year ago for $150 million. Both these transactions have resulted in capital gains for the broadcaster whose profitability had taken a hit as a result of the cashburn in the entertainment business. NDTV Networks broadcasts the general entertainment channel NDTV Imagine, which, like every channel in that genre, must burn a lot of cash.

We had reported earlier that NDTV is close to spinning off NDTV Imagine as a separate company and selling it off to Time Warner (NYSE: TWX). With bond holders and NBC out of NDTV Networks, and the lifestyle business getting a strong strategic investor, the deck has been cleared for the potential sale of NDTV Imagine.

If the sale comes to pass, NDTV’s diversification into the entrtainment business will have come full circle. The company launched NDTV Imagine in early 2008 and the channel enjoyed some initial success but has now settled down at the 5th position in GEC rankings. According to our sources, NBCU was unwilling to continue funding the channel and NDTV could not fund it by itself. NBCU’s strategic objectives could also have possibly changed due to developments at home.

A sale to Time Warner would mean a second chance for both companies. While Imagine will get an owner that is willing and capable of investing, Time Warner will get a second go at cracking India’s lucrative entertainment broadcasting market after its first attempt–a joint venture with Alva Brothers, called Real–turned out to be a non-starter.