Mukesh Ambani has entered Television Broadcasting with a bang. Reliance Industries now owns more than 40 TV channels, and also has a strong online presence. One could speculate whether he will bring .......
RELIANCE TAKES OVER NETWORK-18
Reliance Industries Has Taken Over Network18 & TV18
On 2nd Jan 2012, (see SCaT Feb 2012) Mukesh Ambani declared that Reliance Industries Ltd (RIL) was taking a significant stake in Raghav Bahl's TV18 and the Network18 group of companies. Independent Media Trust was set up to finance the acquisition. Bahl retained 51% stake and management control but a clause was built in that allowed RIL the option to convert the Zero Coupon Optionally Convertible Debentures (ZOCDs) into equity shares of Network18, anytime within 10 years. This effectively gave RIL full takeover & direct control.
That was exercised on 30th May 2014. RIL said its ".. board had approved funding of Rs. 4,000 crore (Rs. 40 billion) to Independent Media Trust (IMT), of which RIL is the sole beneficiary," for taking over Network18.
With the move, RIL has taken control of a media and entertainment empire that includes CNBC TV18, CNN-IBN, Colors & HomeShop18.
Mukesh Ambani now directly controls one of the largest Indian media conglomerates, which spans general news (CNN IBN, IBN7), business news (CNBC TV18 and CNBC Awaaz), and regional news (ETV news network and IBN Lokmat), apart from a 50% stake in entertainment channels like Colors, MTV, Comedy Central and film studio Viacom18 Motion Pictures. Also included are e-commerce and internet portals, for good measure.
There was an exodus of key personnel under Bahl. Network18 group CEO B Saikumar, COO Ajay Chacko and CFO RDS Bawa, all quit that day. The IBN-CNN News Channel Editor Rajdeep Sardesai and his wife and deputy editor at CNN- IBN Sagarika Ghose, went on leave immediately, and later declared that they had resigned.
RIL has made open offers for the shares of Network18, TV18 and Infomedia Press Ltd.
As per the open offer document under the SEBI substantial acquisition of shares and takeovers (SAST) regulation, IMT and other persons acting in concert, will spend Rs. 2,295.19 crore out of the Rs. 4,000 crore (Rs. 40 billion) in the first round of the open offer.
Network18 is largely (71.25% voting right) controlled by IMT vide its 2012 purchase. IMT will acquire the remaining 21.96% for Rs. 943.70 crore which translates to Rs. 41.04 per share.
IMT will be acquiring 26% additional stake in TV18 for Rs. 1,347.57 crore to lift its TV18 holding to over 81%.
Thereafter, as per law, RIL / IMT must offer to buy out the remaining shareholding with the public, and TV18 and Network18 will be delisted from the stock exchanges.
IMT will also spend Rs. 3.92 crore (@ Rs. 3 per share) to raise its Infomedia stake to 73.60%.
707 CR FOR BAHL
Raghav Bahl and his wife Ritu Kapur will take home Rs. 706.96 crore for their stake in the Network18 and TV18 group of companies. It is a well-deserved amount for the diversified media & entertainment conglomerate built from scratch since 1993.
IMT will spend Rs. 705.96 crore towards acquisition of Network18's several holding companies, which the Bahls own. Additionally, IMT will acquire the entire holding of RB Holdings Pvt Ltd (RBHPL) from Bahl and Kapur for a total consideration of Rs. 1.00 Crore. As a result, Bahl and Kapur will get an upfront amount of Rs. 706.96 crore (Rs. 7.07 billion).
A complete takeover of this magnitude will certainly see changes in the top management of TV18 and Network18 immediately, and probably a more gradual change in the management of smaller companies in the Group.
The management changes began even before the take-over was made public. Ofcourse Bahl had in place an excellent team. However the companies were clearly over-staffed & several hundred have been retrenched by Bahl's team, a few months ago.
RIL too has made a few major hires, in the media sector. In May, Zee Media CEO Alok Agrawal quit to join RIL. Also, Gautam Chikermane joined RIL as New Media Director while BV Rao was appointed News & Communication Director.
TV CONTENT FOR RELIANCE 4G
It is widely reported that the much delayed Reliance Jio 4G wireless internet and telephony service will be finally rolled out around Divali 2014. To add impetus to its 4G broadband service, Jio plans to also offer TV channels and other content wirelessly to its consumers. A bouquet of more than 100 channels is talked about, mostly Free-To-Air. The Network18 and TV18 channels, e-commerce sites and internet portals will be an excellent complement to the service. n