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Reliance Industries Limited (RIL) has divested its undisclosed stake in Eenadu Group to TV18 Broadcast Limited. At the same time, Infotel Broad Band Services Limited (Infotel), a subsidiary of RIL, has entered into an MoU with TV18 and Network18 Media and Investments Limited for preferential access to all content for distribution through its proposed 4G Broadband Network.
RIL, through its group companies, has investments of Rs 2,600 crore and holds ownership in various ETV Channels. TV18 Broadcast Limited, through TV18 and Network 18, has also announced a rights issue to raise up to Rs 2,700 crore for repaying its debt and acquiring the news and entertainment channels of the Eenadu group.
Rights issue
Independent Media Trust, set up for the benefit of RIL, has decided to fund the promoters of Network 18 and TV18, to enable them to subscribe to the proposed rights issue announced by both the companies.
The promoter companies of Network18 and TV18 and the Trust have entered into a Term Sheet, under which the Trust will subscribe to the Optionally Convertible Debentures to be issued by the promoter companies.
Through the proceeds of the rights issue, Network Broadcast will acquire complete ownership of the Eenadu group's regional Hindi news channels, a 50 per cent stake in the regional channels (non-Telugu GEC channels) and a 24.50 per cent stake in the ETV Telugu and Telugu News channels. The remaining stake will be held by the Eenadu group.
Revenues
With an outlay of Rs 2,100 crore earmarked for the acquisition, the company will have the option of buying the remaining stake in the rest of ETV's bouquet of channels.
Mr Raghav Bahl, the promoter of Network18 and TV18, will retain management control and own 51 per cent stake in Network 18 and TV18. Network 18 will remove debt of nearly Rs 500 crore.
Addressing an analysts' call, Mr Raghav Behl, President and Editor, Network 18, said: “We are out of investment mode. Currently we get one-third of the subscription/distribution revenues, compared with networks such as Zee and expect to match their advertising revenues.''
Subscription revenues the from the Viacom 18 network amount to Rs 300 crore. Mr. Harish Chawla, Group CEO, Network 18, said: “It (regional) is a high growth market and the ETV channels will add bulk to our bouquet, helping us in negotiating deals in the digital space.''
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