Mukesh Ambani forays into media via TV18

MUMBAI: In a swift move, India?s richest man Mukesh Ambani marks his entry into the media business.

Ambani-led Reliance Industries (RIL) said Tuesday it will invest in Raghav Bahl-promoted Network18 Media & Investments and TV18 Broadcast through an Independent Media Trust.

As per the deal, the subsidiary will fund promoter entities of the TV18 group to subscribe to rights issues. In return, it will get access to content from TV18 group for its 4G broadband network that Reliance is all set to roll out this year.

Bahl will continue to retain management and 51 per cent control over the two media entities.

Meanwhile, boards of both -- Network18 and TV18 -- have approved rights issue of Rs 27 billion each. TV18 Rights Issue proceeds, at a price of not more than Rs 40 per equity share, will be utilised to repay the existing debt, fund the acquisition of ETV Channels and fund working capital needs.

Meanwhile, Network18 rights issue proceeds, at a price not more than Rs 60 per equity share, will be utilised to repay the existing debt and subscribe to the Rs 14 billion of the rights Issue of TV18.

The net aggregate rights issue of both Network18 and TV18 will result in a fund raising of Rs 40 billion.

The current promoter entities of Network18 will acquire shares worth Rs 17 billion of this rights issue, for which they have entered into an arrangement with RIL?s trust.

"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 and manage scale?to make this a "win-win" partnership. This will create value and be accretive to the shareholders of RIL," RIL said in a press release.

Meanwhile, TV18 will acquire the TV business of the Eenadu Group.

The TV18 board announced that the company plans to attain 100 per cent interest in regional news channels in Hindi namely ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan and ETV Bihar and ETV Urdu channel, 50 per cent interest in ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya and 24.50 per cent interest in ETV Telugu and ETV Telugu News.

TV18 will have board and management control of ETV news channels and ETV non Telugu GEC channels. The board has approved an outlay of up to Rs 21 billion for the acquisition.

TV18 also has an option to buy the balance 50 per cent interest in ETV non Telugu GEC channels and additional 24.50 per cent interest of ETV Telugu Channels.

Ernst & Young (E&Y) acted as advisors for financial and tax due diligence and valuation of the assets. The legal due diligence was carried out by Khaitan & Co, TV18 said.

After the deal, on a combined basis, TV18 will be offering a mix of national and regional channels catering to diverse genres like Hindi and regional entertainment; general news in English, Hindi and regional languages; business news in Hindi, English and regional languages; music; kids; devotional and infotainment channels.

As a part of the deal for acquisition of ETV Channels, Network18 and TV18 have also entered into a Memorandum of Understanding with Infotel Broadband Services Limited (?Infotel?), a subsidiary of RIL. Under this agreement, the companies and their associates will have the right to distribute the content of all the media and web properties of Network18 and programming and digital content of all the broadcasting channels through 4th Generation Broadband Network of Infotel. Infotel shall have preferential access to this content on a first right basis as a most preferred customer.

Network18 founder, editor and MD Raghav Bahl said, ?This is a truly seminal moment in the 18-year-old history of Network18/TV18. 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, TV18 will have a bouquet of leading television channels. Riding on the imminent digital wave, I am convinced that this acquisition is a significant move which will catapult TV18 into the forefront of India?s broadcasting industry.?

"Further, on a debt free basis, both Network18 and TV18 hope to strengthen their position in various media segments like news and entertainment broadcasting, consumer internet, digital and print publications, filmed entertainment, home-shopping, e-commerce and other emerging businesses."

On the news, both Network18 and TV18 stocks ralled and hit the upper circuit in the early hours of trading on the BSE. While Network18 scrip closed at Rs 46.4 per share, TV18 closed at Rs 33.70 per share on Tuesday.

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