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New Delhi: The acquisition of Hindi general entertainment channel NDTV Imagine by Turner Asia Pacific Ventures has been approved by the board of Time Warner Inc., the company said in an announcement on Thursday.

Last fortnight, Turner Asia Pacific bought 92% stake in NDTV Imagine Ltd from NDTV Networks Plc., an indirect subsidiary of NDTV Ltd, the New Delhi-based news broadcaster.

At the end of the $126.5 million deal, Turner holds 92% in NDTV Imagine while 3.2% is retained by NDTV Networks and the remaining 4.8% is held by its chief executive officer Sameer Nair and other Imagine employees.

NDTV Imagine moves into the Turner fold along with two other television channels, namely, Imagine Showbiz and Lumiere.

The $126.5 million paid by Turner includes the $50 million primary capital infusion for funding the Imagine business. Nair told Mint that the entertainment business is part of the Turner family now.

"It's true that we cannot continue with the NDTV prefix in the Hindi channel brand name (NDTV Imagine), but we are waiting for regulatory approvals before we can change that," said Nair, declining to share the proposed name for the channel.

With an average gross rating points (GRP) of 100, NDTV Imagine ranks fifth, way behind the leading Hindi channels such as Colors, Star Plus, Zee and Sony. However, Steve Marcopoto, president, Turner Broadcasting System, Asia Pacific, told Mint that the intention was "to be a top-class player running a profitable business with financial returns."

"You can't plan to be a 100 or 300 GRPs channel. You just have to compete, offer differentiated content and see where you end up," Nair added.

Incidentally, Viacom 18's Hindi entertainment channel Colors, launched six months after NDTV Imagine went on air in January 2008, managed to displace the long-standing market leader Star Plus from the top slot and garnered the highest viewership share in the genre.

Responding to whether the $50 million pumped in by Turner was sufficient for the channel to fight against entrenched players, Nair said money is important but it is not all. "Programming begins with a good idea and not all expensive shows work," he said.

The channel will need to drum up more revenue from advertising, said Vivek Gupta, partner, BMR Advisors, a boutique consultancy.

"For a channel that lost huge money last year, infusion of $50 million will see it through the next seven-eight months," Gupta said. "With Time Warner backing, funds in the future will not be an issue. But Imagine will need to generate annual advertising revenue of Rs700 crore to crack the market and be a leader," he added.

According to Marcopoto, Imagine was sufficiently funded and dismissed the argument that Time Warner paid a huge sum to acquire the channel, which is not a category leader.

"Valuations are not based on GRPs alone. Imagine is a sound property with a huge potential," he said. Asked if NDTV Imagine Ltd had a gross debt even after the infusion of $50 million, Marcopoto declined to comment.

"We do not share specifics," he said. Bank of America-Merrill Lynch was the financial adviser to Time Warner on the NDTV Imagine transaction.

With this acquisition, Turner will also hold a majority stake in movie production company NDTV Imagine Pictures Ltd, Alliance Lumiere Ltd (a joint venture operating a multi-language world cinema channel) and Imagine Showbiz Ltd (a joint venture operating a Bollywood entertainment and music channel).

However, for Turner, which has been in the country for over 15 years through its other channels, India is the largest revenue market in Asia. "We acquired two channels in Japan recently but after this (Imagine) acquisition India has become our biggest revenue market again," Marcopoto said.

The company is happy with its growth rates in India. "We were growing at 20% for many years. After the global economic crisis, the growth rate dropped but we are still growing at about 12% a year in this market," said Anshuman Misra, managing director of Turner International India Pvt. Ltd.

With the conclusion of the deal with Time Warner, NDTV Imagine joins Turner International India's portfolio of channels in the country, including children's channels Cartoon Network and Pogo, news channel CNN International and entertainment channels such as WB, HBO and TCM.

Turner's other partnerships in India include one with Zee Entertainment and Enterprises Ltd (ZEEL) for a satellite channel distribution company called Zee Turner Ltd.

NDTV Imagine, currently part of another distribution platform, is expected to soon join the Zee-Turner bouquet. Turner International India's Misra said talks were on with Zee-Turner but no deal had been closed.

Interestingly, Turner seems to be banking on NDTV Imagine to drive its Hindi entertainment business in India after its initial effort with Real, the TV channel launched in a joint venture with the Alva brothers' Miditech Pvt. Ltd, failed to take off.

According to Anshuman Misra, the joint venture partners, Turner and Alva Brothers Entertainment, are reassessing plans to pursue new opportunities together. "These plans will be announced as soon as they are confirmed," he said.