OSN: IPO or trade sale on cards?
April 7, 2014
By Chris Forrester
Orbit Showtime Network (OSN) is to be given an Initial Public Offering, and a listing on the London exchange. This is not the first time that the proposal has been made but now seems to have legs given a statement last week from majority owners KIPCO.
KIPCO Deputy Chairman Faisal Al-Ayyar said he hoped the listing would be completed by the end of this year, and that he was looking at a primary listing in London. “We start the process within a few weeks,” Ayyar told reporters on the sidelines of KIPCO’s AGM. Asked where OSN would list, he said: “It depends on how much corporate governance is needed, and how much is needed as a stake to be sold . . . all things are tilted towards London, but not as GDR [global depositary receipts], as a primary listing.”
He did not say which banks were involved in the process. OSN operates in the Middle East and North Africa. Ayyar said it currently had around $700 million in annual revenues which he expects to double over the next three years. KIPCO is on record as saying the broadcaster had nearly a million subscribers.
KIPCO said last June it was planning to list OSN. It currently has a 60.5 per cent stake and hired financial group Rothschild to advise on the IPO. Last year brokerage Arqaam Capital said it had raised its valuation of OSN to $4.3 billion from the previous estimate of $2.5 billion, an increase of 72 per cent.
KIPCO itself reported a 75 per cent rise in Q4 net profit in February, saying OSN had performed strongly.
But there’s also another scenario which could well emerge. One strong rumour currently going the rounds in the Gulf is that Al Jazeera is itself interested in buying OSN from KIPCO and minority owners Mawarid. Whether it would be Al Jazzera or its sports sister-company beIN Sports which would make the acquisition is open to question, but a combination of Al Jazeera and OSN would be a powerful all-embracing sports + movies + series combination would deliver a very strong pay-platform.
However, there are some very material challenges to this scenario, as suggested by local sources which suggests that the current political tensions between Qatar and Saudi Arabia (and Mawarid is Saudi-financed and based). Also not helping is the link with Israeli conditional access in the form of NDS (although NDS is now firmly owned by Cisco). Those sources also suggests that Saudi Arabia doesn’t much care for propitiatory CA systems.
Either way, an IPO prospectus for OSN would make fascinating reading and unveiling much of the past performance, and future prospects for pay-TV in the Gulf region.