Sun TV may hive off SunRisers Hyderabad as a separate entity or go for an IPO

Sun TV Network is not averse to spinning off its Indian Premier League franchise SunRisers Hyderabad (SRH) as a separate entity or explore its IPO listing to unlock value and maximise shareholder returns.

“If there is a way in which value unlocking can be done for the benefit of the shareholders, we would certainly look at it at an appropriate time,” SL Narayanan, Group CFO of Sun TV Network, said at the second quarter earnings call on Monday.

“At this point in time, SunRisers is a division of Sun TV Network Limited and we disclose its revenues and costs every season,” he added.

Delhi Daredevils precedence
Responding to a query on whether stake-sale, spin off or listing of franchises is allowed, Narayanan said franchises are saleable and cited the case of Delhi Daredevils.

In 2018, Jindal South West (JSW) Sports bought a 50 per cent stake in Delhi Daredevils from GMR Sports Private Limited. In June 2021, US-based private investment firm RedBird Capital Partners, which has interest in the parent company of Liverpool Football Club and Boston Red Sox, picked up a 15 per cent stake in Rajasthan Royals for an undisclosed amount.

In 2012, the Kalanithi Maran-promoted media group had bought SunRisers Hyderabad for ₹85.05 crore per year payable for five years between 2013 and 2017.

Zero investment asset
Narayanan said the franchise made a loss of about ₹147 crore in the first five years. “With a new contract kicking in after that, we recovered almost all of those losses in the sixth year. In that sense, we have created an asset with zero investment,” he said. The team, he added, generates positive cash flows now.

Sun TV Network earned ₹175.55 crore in IPL revenues for the half-year ended September 2021 against ₹117.04 crore during the same period last year. IPL franchises earn from brand sponsorships, prize money, ticket and merchandise sales and a guaranteed 50 per cent revenue share from IPL’s central contract revenue pool.

“Ticket sales were about ₹27-28 crore. Unfortunately, last year and this year we were not able to get any ticket sales at all. Also, with the substitution of Vivo with Dream 11 as the title sponsor last year, the sponsorship fee earned by BCCI almost fell by 50 per cent which, in turn, impacted the distribution to the team owners,” Narayanan said. The Hindu BusinessLine