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Mukesh Ambani, the media baron

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Moneylife Digital Team | 03/01/2012 04:57 PM | 

After today’s announcement Mukesh Ambani now controls Eenadu TV and the Network18 Group with an indirect finger in NDTV. That is about 30 channels across entertainment and news segments in English and regional languages

In his second move to enter into media and entertainment, Mukesh Ambani, the richest person in India, finally made his intentions clear. In a deal that may appear complicated to a lay person, Independent Media Trust, a trust set up by Mukesh Ambani's flagship Reliance Industries (RIL) has agreed to fund promoters of both Network18 Media and Investments (Network18) and TV18 Broadcast (TV18) to subscribe to the proposed rights issue of these companies. Last month, Moneylife had reported about Mr Ambani's interest in the debt-ridden Network 18 Group.

According to a media release issued by RIL, Raghav Bahl, the promoter of Network18 and TV18, and his team would continue to have full operational and management control of both the companies. Network18 Media and Investments, the holding company for the conglomerate, has annual revenue of about Rs1,500 crore but makes losses. The Network18 Group is up to its neck in debt and was apparently talking with Thomson Reuters to sell a 26% stake in Newswire18, a real-time financial news agency.
 
"The Promoter Companies of Network18 and TV18 and the Trust have entered into a Term Sheet under which the Trust would be subscribing to the Optionally Convertible Debentures (OCDs) to be issued by the Promoter Companies. Reliance will leverage its deep understanding of the Indian markets—consumer insights, technological expertise, and the ability to build & manage scale—to make this a "win-win" partnership. This will create value and be accretive to the shareholders of RIL," the Mukesh Ambani group company said in a press release.

This is the first part of the deal. In the second part, Infotel Broadband Services (Infotel), a unit of RIL, has signed a memorandum of understanding with both, TV18 and Network18 for preferential access to distribute all contents of the media group companies through its fourth-generation (4G) broadband network. As per the agreement, RIL would divest part of its interest in Eenadu TV (ETV) channels to TV18.

Both Network18 and TV18 are raising funds worth Rs2,700 crore each through rights issues. Network18, the promoter and majority shareholder in TV18 would subscribe to around Rs1,400 crore out of the total Rs5,400 crore rights issue. "The contribution of the current promoter entities of Network18 in this net aggregate rights issue of both Network18 and TV18 will be about Rs1,700 crore, the companies said in a release to the stock exchanges.

ETV owned by Ramoji Rao has a bouquet of vernacular channels and some of the language channels enjoy top position in that region. Earlier, RIL had admitted that the company and its group companies invested Rs2,600 crore in Ushodaya Enterprises, the holding company of ETV channels.

At present, RIL holds 100% interest in regional news channels such as ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar and ETV Urdu channel, and entertainment channels like ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya. RIL also holds 49% interest in ETV Telugu and ETV Telugu News, through its investment.

The Mukesh Ambani group has divested its 100% interest in ETV news channels, 50% in entertainment channels and 24.5% interest in Telugu channels to TV18.

According to media reports, billionaire Mukesh Ambani, India’s richest person has also been holding talks with a host of media and entertainment firms, including Walt Disney’s Indian venture UTV Software, to acquire content for its upcoming telecom venture. US-based Walt Disney holds over 50% stake in UTV Software Communications and it is in process of acquiring the entire stake in the Indian firm. A deal with Walt Disney would give RIL’s telecom venture access to a host of games, entertainment and other children-focussed content solutions.

RIL has a 95% stake in Infotel Broadband Services, marking its entry into the telecom sector. Infotel is the only company to have pan-India BWA (Broadband Wireless Access) licence.
 
More than two decades ago Reliance had made a bid to enter the media by buying the Observer newspaper which it ran half-heartedly and closed down. Anil Ambani, the estranged and debt-strapped younger brother of Mukesh was leading that effort. The ADAG group controlled by Anil Ambani has large stakes in TV Today and other media companies.

The Network 18 Group comprises a variety of television, print, web and entertainment properties most of which are losing money. Its main properties are collaborations with top media companies such as CNBC, CNN, MTV and Viacom.


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