MUMBAI: TV18 Broadcast is snapping up Ramoji Rao-owned Eenadu TV to expand its regional broadcasting presence that is confined to Marathi news at this stage.

A formal announcement is expected soon, according to sources familiar with the development.

ETV?s talks with Sony proved inconclusive. Sources confirmed that Sony pulled out of the deal as the global major found the valuation too high. Sony was involved in an all-cash deal but did not agree on the valuation of Rs 25 billion for the regional entertainment channels (news was out of the ambit).

The acquisition of ETV Network (TV business) will give TV18 Broadcast a quick presence across all important regional markets of India, barring Tamil Nadu and Kerala.

"This ensures that TV18 does not have to launch green-field operations and fragment the market further. TV18 will be able to effectively compete with its 3 biggest rivals - Star, Sun and Zee - across various markets as ETV‘s portfolio is fairly good in terms of ratings. This could also help in driving carriage charge synergies as TV18 will now become a much larger bouquet. Content can obviously be leveraged across languages," a media analyst at a local broking firm said on condition of anonymity.

The acquisition will be partly funded through a rights issue. As the enterprise valuation of ETV is expected to be above Rs 20 billion, the market is predicting a part-cash, part stock deal.

ETV?s annual revenue is around Rs 5 billion. "Some speculators are saying that the valuation is around Rs 25 billion. That is about five times the revenue of ETV and seems too high. This may mean a part-cash deal," the analyst said.

TV18 has a market cap of Rs 10.31 billion.

A deal with ETV will possibly spoil Network18?s joint venture with Sun Group for channel distribution. But if it goes unscathed (just as the Zee-Star distribution deal), the bouquet will become formidable.

TV18 Broadcast runs four news channels (CNBC TV18, CNBC Awaaz, CNN-IBN, IBN 7) and has a 50 per cent stake in Viacom18 (which runs Hindi GEC Colors and channels such as MTV, VH1, Nick and Sonic) and owns 50 per cent in IBN Lokmat (Marathi news channels). Network18 also has interests in Internet, print (magazines) and home shopping.

ETV Network has the largest coverage of India in terms of regional channel portfolio with presence across South India to UP. It runs 12 channels and all its channels carry news content (for at least ? an hour) along with entertainment content depending on geography.

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