Reliance Entertainment CEO looks to buy Anil Ambani film firm via US SPAC

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anil ambani, reliance entertainment, shibasish sarkar, reliance, mbo, us spac

The veteran film executive behind Udta Punjab, Queen, Naam Shabana, and television shows like Kaun Banega Crorepati looks to hit a jackpot.

Shibasish Sarkar, the group chief executive of Reliance Entertainment Pvt Ltd, is in discussions with Anil Ambani to buy the private movie studio and content distribution company owned by the industrialist and his family, as a management buyout (MBO), said people aware of the matter.

Sarkar plans to use funds from his special purpose acquisition company (SPAC), International Media Acquisition Corp (IMAC), for this transaction, which could value

Reliance

Entertainment at Rs 800-1,000 crore, they said.

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Discussions are ongoing to sign a non-binding agreement by the end of this calendar year and, by March, conclude the transaction, unless there are any last-minute glitches over valuations and other financial terms.

A Reliance Entertainment spokesperson and Sarkar declined to comment.

Sarkar had filed for a $230 million (Rs 1,715 crore) initial public offering in the US with a Nasdaq listing, ET had reported on April 9. The US Securities and Exchange Commission has approved his proposal. The valuations are yet to be finalised and agreed upon.

Sarkar has been at the helm of affairs at Reliance Entertainment since early 2019, after having joined the company in 2007 as its chief financial officer, and was instrumental in changing the strategy of the then fledgling studio which burnt money in some Bollywood duds. The move is seen as part of an ongoing deleveraging exercise across Ambani’s once-sprawling empire that included telecom and financial services.

Sarkar is transitioning from his current executive role in the company overseeing two of the major blockbuster releases from the Reliance stable — Akshay Kumar’s Sooryavanshi this Diwali and 83, a movie about the famous cricket World Cup victory, during Christmas — after which he is expected to move full time to his SPAC vehicle and announce the MBO. He is the chairman and CEO of IMAC.

“He is scouting for several assets in the regional OTT and multiplex space so that he can have a comprehensive bouquet of content, distribution and exhibition in his portfolio. This is a business he has been involved in for over a decade so it will be a natural fit,” said an executive familiar with the development, speaking on condition of anonymity.

Reliance Entertainment’s international business, a joint venture with Steven Spielberg’s DreamWorks called Amblin Partners, and the radio properties will be kept out of the buyout.

Over the last 15 years, Reliance Entertainment has created an impressive portfolio of films, gaming and animation content in Hindi and other regional languages, which it produces, acquires, and distributes, including Race 3, Simmba, Darbar, NGK, Panipath, Namaste England, Vishwaroopam 2, and Aquaman. Through its new media and digital-distribution arm, the company has also ventured into video-on-demand content to Internet service providers, telecom companies, value-added services aggregators, online retailers, platforms, and devices. It has a string of JVs with leading Bollywood filmmakers like Rohit Shetty, Imtiaz Ali, Neeraj Pandey and Phantom Films of Anurag Kashyap, Madhu Mantena and Vikramaditya Motwane. Phantom Films was dissolved in 2018 after the four partners separated. However, the IPs remain with Reliance Entertainment. It also co-produces animation shows like ‘Little Singham’ for Discovery Kids India, ‘Golmaal Jr.’ for Nickelodeon and ‘Smaashhing Simmba’ on Pogo.

In TV content, the company owns Big Synergy, which co-produces KBC and has other IPs in the factual entertainment space and also runs movie-on-demand streaming service BigFlix and game publishing business under Reliance Games.

Content creation is becoming a big business worldwide and has seen Indian billionaire Kumar Mangalam Birla revive his ambitions with Applause Entertainment that makes content for digital platform. “Without good content no network can survive. People’s tastes are evolving, language barriers are disappearing. Whoever has IP is king,” said the CEO of a rival film studio.

According to the Ficci-EY report 2021, India’s media and entertainment business is estimated to grow 25% to reach Rs 17,300 crore ($ 23.29 billion) in 2021, and projected to increase at a CAGR of 17% between 2020 and 2023.

However, financial distress compounded by nearly two years of the Covid-19 pandemic has impacted the company’s financials. Last October, CARE Ratings downgraded five bank facilities availed of by the company, including a long-term loan of Rs 300 crore. Before Covid, the company clocked revenue of Rs 880 crore and a loss of Rs 60 crore, as per its FY19 annual report.

Sarkar has managed an impressive team for IMAC. Its board members include Sanjay Wadhwa, managing partner of the AP International Group. Vishwas Joshi is the chief financial officer. Joshi was an executive director and head of studio finance at Walt Disney Co India from June 2007 to September 2020. The nominee directors include former co-head of Creative Artists Agency’s global client strategy David M Taghioff, Stampede Ventures founder Greg Silverman, film producer Deepak Nayar, Paul Pelosi Jr who advises emerging and large companies, and CBW Bank chairman Suresh Ramamurthi.

In the spotlight

  • Shibasish Sarkar joined Rel Entertainment as CFO in 2007, became Group CEO in 2019
  • Was instrumental in changing strategy of the studio

  • Plan as of now is to sign non-binding pact by end of 2021, conclude deal by March

  • The international biz, a JV with DreamWorks called Amblin, & radio properties will be kept out of buyout
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