industry

RIL to consolidate media and distribution business


Mukesh Ambani-owned Reliance Industries (RIL) is restructuring its media and distribution operations by merging three group entities — Television 18 Broadcast, Hathway Cable and Datacom and Den Networks — with flagship Network18 Media and Investments.

The entire broadcasting business will be housed under Network18, while the cable and ISP businesses will be in two separate wholly owned subsidiaries of Network18.

The merger will be executed through a share swap.

Post restructuring, RIL’s holding in Network18 will reduce from 75% to around 64%.

The restructuring will create a media entity with interests in news, entertainment, internet, ISP and cable businesses that can compete with the likes of Zee Group, , and Sun TV Network among others.

Bennett Coleman and Co Ltd (BCCL), the publishers of The Economic Times, also competes with some of the entities controlled by Network18 group.

The Board of the respective companies approved the scheme of amalgamation and arrangement at meetings held on Monday.

The restructuring will create “value-chain integration, and render substantial economies of scale”, Network18 said in a statement. The scheme will also simplify the corporate structure of the group by reducing the number of listed entities.

The consolidation of TV business under Network18 will create an integrated media and distribution company with a revenue of over Rs 8,000 crore, one of the largest listed players in the sector.

At a consolidated level, Network18 will be a net-debt free company, it said.

The cable businesses of Den and Hathway will become one entity providing last mile connection to over 15 million households in India, as per the press release. The combined broadband entity, meanwhile, will serve over 1 million wire-line broadband subscribers across the country.

As per the scheme of arrangement, shareholders will receive 92 shares of Network18 for every 100 shares of TV18; 78 shares of Network18 for every 100 shares of Hathway; and 191 shares of Network18 for every 100 shares of Den.

Valuation report for the fair share exchange ratio has been provided by BDO Valuation Advisory and MSKA & Associates, while Citgroup Global Markets India (for Network18) and ICICI Securities (for TV18, Den and Hathway) issued Fairness Opinion on the share exchange ratio.

Trilegal is the legal advisor and Dhruva Advisors is the Tax Advisor for the Scheme.

Ambani’s Media business

Network 18 is 75% owned by Independent Media Trust whose sole beneficiary is RIL. As of now, Network 18 owns 51% in TV 18 which in turn owns 51% in Viacom 18 (a JV with Viacom) .

The entertainment channels that are housed under the Viacom 18 JV include Colors, MTV, and Nickelodeon among others and video streaming service VOOT.

Sony is currently engaged in negotiating with Reliance Group to merge their entertainment businesses to create a larger general entertainment company. Those discussions are independent of Monday’s restructuring, said sources aware of the matter.

For FY19, Network18’s consolidated operating revenue stood at Rs 5,116.18 crore, and EBITDA was at Rs 212 crore. The company posted a post-tax loss of Rs 178 crore.

TV18, on the other hand, posted revenue of Rs 4,943 crore, EBITDA of Rs 314 crore and net profit of Rs 210 crore for FY19.

The current market capitalisation of Network18 is Rs 2,999.51 crore, while that for TV18 is Rs 4,311.62 crore as on Monday. Hathway’s market capitalisation end of Monday trading session stood at Rs 3407.45 crore and Den’s Rs 2581.78 crore.

In October 2018 — RIL had announced investment of $1 billion to acquire majority stake in Hathway and DEN.

RIL through a network of subsidiaries had acquired 58.92 per cent in Den networks and 51.34 per cent in Hathway. Hathway Cable was owned by the Raheja Group, while Sameer Manchanda owned DEN Networks. They are both amongst the biggest players in the cable broadband market.





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