The Competition Commission of India (CCI) has approved Mukesh Ambani-led Reliance Industries Limited’s (RIL’s) stake purchase in media monoliths Network 18 and TV 18 broadcast Ltd., citing that the deal ‘is not likely to have an appreciable have adverse effect on competition in India’.
In January this year, RIL joined hands with Network 18 group, agreeing to sell a part of its interest in Eanadu Group of channels, run by Hyderabad based media entrepreneur RamojiRao. RIL, through an independent trust, also agreed to fund the promoters of Network 18 group for rights issue of two of its listed businesses – Network18 Media and Investments, which runs a web portal called ‘moneycontrol.com’, and TV18 Broadcast Ltd., which operates a number of business and general news channels, including CNBC TV18 and CNN-IBN.It is estimated that Network 18 and TV18 would raaise about Rs. 4,000 crore,which includesRs. 1,700 crore as contributions from the promoters.In due course of the deal, the media group hopes to use RIL’s investment to cut down debt and eventually buy out RIL’s 49% stake in Eenadu, a pan-India vernacular languages channel, in which RIL has invested close to Rs.2600 crore.
RIL is expected to hold close to 30% stake in the promoter group after necessary transactions are completed while Network 18’s RaghavBahl will continue to hold 51% stake and voting rights in the group. Also RIL, which is gearing up to roll out its 4G broadband services soon, will get preferential access to the group’s content for distribution through the 4G broadband network being set up by the new telecom entrant, thereby assigning a fair amount of competitive thrust to Reliance’s telecom aspirations.
Reliance Industries, through its newly-created vehicle Independent Media Trust, has been allocating funds through optionally convertible debentures into Network18 Media and Investments Ltd (NMIL), the group’s holding company, and TV18 Broadcast Ltd. The CCI – a body of the Government of India responsible for enforcing The Competition Act, 2002 throughout India and preventing activities that have an adverse effect on competition in India, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India – suggested that the proposed combination of deal is viable and poses no apparent threat to the competition in the country. CCI noted that the business of TV channels features a strong supply of broadcasters for various genres, targeting national and regional audience/viewership. It said, “it is apparent that new television channels can be started with ease in India with sufficient scope for innovation and competition, both in terms of technology and content”, thus advocating a positive opinion about the deal between RIL and Network 18 as wholesome one.