Reliance to control Network18

Reliance Industries (RIL) has agreed to provide funding of up to Rs.4,000 crore to the Independent Media Trust (IMT) for acquisition of Network-18 Media and Investments, one of the country’s biggest media companies, RIL said in a statement on Thursday. RIL, India’s largest private sector company by revenue and market capitalisation, is the sole beneficiary of IMT and will act as a person in the statutory open offers resulting from the acquisition.
“IMT would use the funds to acquire control over Network 18 and TV 18… IMT would be making open offers to public shareholders for acquisition of equity shares in Network 18, TV 18 and Infomedia Press. IMT would be simultaneously making the Public Announcement under Takeover Regulations. RIL would be a Person Acting in Concert to the open offers,” according to a statement issued by RIL. TV18 and Infomedia Press are subsidiary companies of Network 18.
This transition is likely to result in Raghav Bahl, the promoter of the Network18 Group, exiting the media empire he founded two decades ago. Essentially, the transaction announced on Thursday amounts to a conversion of loans given by RIL in 2012 into shares in Network18 group companies.
The press release by RIL said the acquisition would results in synergies with its upcoming 4G plans because of the digital, e-commerce and broadcast content of the Network 18 Group. Apparently as a precursor to the impending announcement, in the last 48 hours, Network 18 had seen a spate of top level-resignations.
Post conversion IMT will end up as the single largest shareholder in both the companies. IMT will directly own 78% in Network 18 and 9% in its subsidiary in TV18, the press statement said.
Flagship Network 18 and its broadcasting arm TV18 operate over 30 channels along with its JV partners like Viacom, AETN Networks and subsidiaries. The bouquet includes both news properties like CNN IBN, CNBC-TV18, CNBC Awaaz and general entertainment channels like Colors, MTV, Nick and History TV18.
While the takeover by IMT had been anticipated for a while the resignation of the top 3 Network 18 executives in the last 48 hours had compounded the speculation.