Den, Digicable in advanced merger talks

MUMBAI: Is further consolidation coming to Indian cable TV land? Last year, Zee and Star merged their distribution aggregation firms - Zee Turner and Star Den - to form Mediapro. Last week, News Corp announced that it was exiting from leading Indian cable TV MSO Hathway Cable, paving the way for private equity firm Providence to enter.

Now, the buzz is gaining ground that a deal between Digicable and Den Networks is imminent. Sources indicate that talks between the two are at an advanced stage.

"Talks are on for a share-swap deal. Details of the share swap ratio are being worked out," a source familiar with the development said.

Apparently, private equity firm Ashmore, which controls Digicable, is eager that a deal does indeed take place.

"We are in talks. But nothing has happened so far," Digicable MD and CEO JS Kohli said.

Den founder-promoter Sameer Manchanda was not available for comment till the filing of this report.

The consolidation is coming in the wake of the government‘s mandate to the cable TV industry to switch over nationally from analogue mode to digital by December 2014, beginning with the four metros over the next three months.

The merger, if it does go through, will result in a behemoth with 17 million subscribers nationally.

A deal between the Den and Digicable, however, will require some serious hammering out, indicate observers.

For starters, is the red ink that stains Digicable‘s finances. Den will have to absorb those. Then there is the huge investment that is needed to upgrade headends and homes to digital.

"The merged entity will have a huge footprint, but the challenge for Den will be to raise capital to support digitisation of this expanded network," said a media analyst.

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