Balaji Telefilms has called a meeting tomorrow of its board of directors on the future of its strategic tie-up with HFCL Nine Broadcasting.
Balaji, in a notice to the National Stock Exchange last week and the Bombay Stock Exchange yesterday, said the meeting was being convened to consider a review of the proposed merger of Nine Network Entertainment India with the company.
HFCL (Himachal Futuristic Communication Ltd) Nine Broadcasting is a 51:49 per cent holding company held by Vinay Maloo and Australian media magnate Kerry Packer. HFCL Nine was to take a 20 per cent stake in Balaji Telefilms.
Balaji's decision has been influenced by the "K factor" and the uncertainties surrounding HFCL Nine's three-hour prime time slot on DD Metro. Balaji creative director Ekta Kapoor's strong belief in the letter K as a good luck talisman for all Balaji projects somehow doesn't seem to extend to HFCL, one of the currently infamous K-10 scrips. These were the scrips favoured by cornered bull operator Ketan Parekh. It is another matter that Parekh's investment firms have a 4.5 per cent stake in Balaji.
Parekh is in the custody of the Central Bureau of Investigation but that doesn't seem to have prevented the HFCL scrip witnessing an abnormal upsurge in the last few days.
HFCL Nine paid Rs 1,210 million last year for a three hour prime time slot on DD Metro. It has been lobbying for a long-term contract for its DD Metro slot ranging between five and 10 years with a revenue-sharing clause. This hasn't been accepted and instead HFCL Nine has been offered the option of extending its contract by six months, ending March 2002 or by another 18 months, up to March 2003.
The matter is at a stalemate at present and the uncertainty surrounding the deal has only added to the doubts within Balaji about the merger.
The deal between the two parties, announced last November, involved a swap ratio where 65 shares of Balaji would be swapped for 200 shares of HFCL Nine.
Balaji Telefilms was to acquire Nine Entertainment India, a wholly-owned subsidiary of Nine Broadcasting India, for Rs 340 million. Post-acquisition, HFCL Nine was to hold 20 per cent equity in Balaji Telefilms.
