Reliance Industries, India's biggest listed company, is expanding its footprint in the media sector, with a major investment in the TV18 group which will effectively fund a consolidation with the Eenadu TV media group.
In return, the Reliance will get preferential access to content from TV18, which runs television channels and websites including CNN-IBN, CNBC-TV18 and Colors. This content can then be distributed through Reliance subsidiary firm Infotel, which is setting up a 4G wireless broadband network across the country.
With Tuesday's deal, the Reliance, controlled by billionaire businessman Mukesh Ambani, will have a major stake in a cross-media enterprise, spanning digital divides to encompass print publications, news and entertainment broadcasting, consumer Internet, film production and e-commerce.
“The combination of India's leading TV content provider, with a bouquet of nearly 25 channels, and the Infotel, will be a significant step in bringing a high quality ‘live TV' experience to broadband customers across the country,” said a Reliance statement.
The TV18 group, currently burdened with more than Rs. 1,400 crore in debt, expects to grow on the back of the Reliance funding. “By inducting such a significant amount of equity, our balance sheets will become among the strongest in the industry. Also, by acquiring this strategic control over several ETV Channels, the TV18 will have a bouquet of leading television channels,” said Raghav Bahl, founder and promoter of the TV18 group.
Despite the cash infusion, Mr. Bahl will retain a 51 per cent stake and management control over the TV18 group, and a Reliance statement insisted that investments were being made through an independent trust with eminent individuals as trustees, in order to preserve the “management, operational and editorial independence” of the media companies.
The multi-layered deal involves the TV18 Broadcast shelling out Rs. 2,100 crore to buy out ETV's Hindi news channels in Uttar Pradesh, Madhya Pradesh, Rajasthan and Bihar, and ETV Urdu, as well as a 50 per cent stake in ETV's Marathi, Kannada, Bangla, Gujarati and Oriya regional channels, and a 24.5 per cent stake in ETV Telugu and ETV Telugu News. The Reliance group firms already own a 50 per cent stake in ETV's Telugu channels and a 100 per cent stake in the other ETV channels with an investment of Rs. 2,600 crore.
Since TV18 is deeply in the red, the Reliance's Independent Media Trust will provide the money required for the acquisition by funding the media group's controlling shareholders to allow them to subscribe to their own equity rights issues, aimed at raising a net amount of Rs. 4,000 crore.
While the Reliance did not specify the amount of its investment or what stake it will ultimately hold in the media firms, a Network 18 statement said that its promoter will contribute about Rs. 1,700 crore to the rights issues.
