Reliance Industries is embarking on a major diversification into the media and entertainment sector with the Mukesh Ambani firm agreeing to fund a transaction that will result in a sizeable stake for itself in a company controlling two of the industry's largest businesses, the Network18 Group and the Eenadu Group of channels run by the Hyderabad-based Ramoji Rao.
People close to the transaction, which has a number of stages, told ET that an RIL subsidiary will help the promoter group of Network18 fund the rights issues of its two listed entities, Network18 Media and Investments, which runs the portal moneycontrol.com, and TV18 Broadcast Ltd, which operates a number of business and general news channels, notably CNBC TV18 and CNN-IBN.
ET was not able to independently verify the amount to be invested by RIL, but people with direct knowledge of the transaction estimated it to be more than Rs 1,500 crore. The money from RIL will help Raghav Bahl, the promoter of the TV18 Group, subscribe to the rights issues of both the listed companies, Network18 and TV18. The full amount expected to be raised through the rights issues is estimated at over Rs 3,500 crore.
The boards of TV18 Broadcast and Network18 Media will meet on Tuesday to discuss plans for a rights issue. Raghav Bahl did not respond to an email questionnaire; a Reliance group spokesperson also remained silent, while B Sai Kumar, the CEO of Network18, declined comment.
Times NOW and ET NOW, owned by Bennett, Coleman & Co. Ltd, the publisher of this paper, compete with some of the television channels owned by Bahl. The strategic investment by RIL will be used by the Network18 Group to retire debt and eventually buy out RIL's stake in Eenadu, the pan-India vernacular language channels owned by Ramoji Rao.
RIL sources said they had invested Rs 2,600 crore in the Eenadu Group through a subsidiary giving it ownership of all businesses apart from its Telugu channel, in which it owns 49%. The transaction, once complete, will result in RIL recovering most of its investments in Eenadu. Messages and an email sent after business hours to the office of Ch Kiron, the managing director of Ushodaya Enterprises, the holding company of the Eenadu Group, did not elicit any response.
By its own admission before the Andhra Pradesh High Court, Reliance Industries has said it has invested Rs 2,600 crore in entities of Nimesh Kampani-led JM Financial Group, which in turn had invested in Ushodaya Enterprises. The AP High Court is hearing a petition alleging the investment was a payoff to N Chandrababu Naidu, the former chief minister of Andhra Pradesh, an allegation RIL has denied in its affidavit. RIL's deal with Bahl, likely to be announced on Tuesday, is expected to create a powerful national news and entertainment company spanning several regional languages as well as English and Hindi.
RIL to get Exclusive Rights to Content
RIL, people close to the transaction said, is expected to hold an economic interest equivalent to a 30% stake in the promoter group of companies, with the original promoter Bahl owning 51% and all voting rights.
Further, RIL will have exclusive rights to content from 30 channels and web properties of the two media houses, which will lend a competitive edge to its broadband services to be rolled out later this year.
People close to the transaction, which has a number of stages, told ET that an RIL subsidiary will help the promoter group of Network18 fund the rights issues of its two listed entities, Network18 Media and Investments, which runs the portal moneycontrol.com, and TV18 Broadcast Ltd, which operates a number of business and general news channels, notably CNBC TV18 and CNN-IBN.
ET was not able to independently verify the amount to be invested by RIL, but people with direct knowledge of the transaction estimated it to be more than Rs 1,500 crore. The money from RIL will help Raghav Bahl, the promoter of the TV18 Group, subscribe to the rights issues of both the listed companies, Network18 and TV18. The full amount expected to be raised through the rights issues is estimated at over Rs 3,500 crore.
The boards of TV18 Broadcast and Network18 Media will meet on Tuesday to discuss plans for a rights issue. Raghav Bahl did not respond to an email questionnaire; a Reliance group spokesperson also remained silent, while B Sai Kumar, the CEO of Network18, declined comment.
Times NOW and ET NOW, owned by Bennett, Coleman & Co. Ltd, the publisher of this paper, compete with some of the television channels owned by Bahl. The strategic investment by RIL will be used by the Network18 Group to retire debt and eventually buy out RIL's stake in Eenadu, the pan-India vernacular language channels owned by Ramoji Rao.
RIL sources said they had invested Rs 2,600 crore in the Eenadu Group through a subsidiary giving it ownership of all businesses apart from its Telugu channel, in which it owns 49%. The transaction, once complete, will result in RIL recovering most of its investments in Eenadu. Messages and an email sent after business hours to the office of Ch Kiron, the managing director of Ushodaya Enterprises, the holding company of the Eenadu Group, did not elicit any response.
By its own admission before the Andhra Pradesh High Court, Reliance Industries has said it has invested Rs 2,600 crore in entities of Nimesh Kampani-led JM Financial Group, which in turn had invested in Ushodaya Enterprises. The AP High Court is hearing a petition alleging the investment was a payoff to N Chandrababu Naidu, the former chief minister of Andhra Pradesh, an allegation RIL has denied in its affidavit. RIL's deal with Bahl, likely to be announced on Tuesday, is expected to create a powerful national news and entertainment company spanning several regional languages as well as English and Hindi.
RIL to get Exclusive Rights to Content
RIL, people close to the transaction said, is expected to hold an economic interest equivalent to a 30% stake in the promoter group of companies, with the original promoter Bahl owning 51% and all voting rights.
Further, RIL will have exclusive rights to content from 30 channels and web properties of the two media houses, which will lend a competitive edge to its broadband services to be rolled out later this year.
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