RIL entered Media & Entertainment Sector by investing in Raghav Bahl-controlled Network18 Group

Mukesh Ambani’s Reliance Industries Ltd (RIL) entered the media and entertainment sector by making a major investment in the Raghav Bahl-controlled Network18 Group, one of India’s largest broadcast companies. Network18 owns several news channels and has significant interests in the film and general entertainment broadcast businesses.

Reliance Industries Ltd. conglomerate on 3 january 2012 unveiled a complex agreement to raise funds to help big media company Network18 pay down debt as well as provide content to Reliance’s new fourth-generation telecommunications network. RIL will help Network18 fund the purchase of a leading regional language rival, Eenadu and at the same time also ensuring a stake for itself in Network18's expanded business

As per the Agreement

In a deal set to be a landmark transaction in the media and entertainment business, RIL will first invest about Rs 1700 crore into the Network18 group. TV18 and Network18, the two listed companies of the group, will use this investment along with capital from other investors to pay debt and buy out a large part of RIL's stake in Eenadu. 

The two businesses will then come together creating a portfolio of 25 channels which will deliver a plethora of programmes to audiences ranging from village folk in Rajasthan to business executives in a Mumbai penthouse.

RIL will get a stake eventually in the holding company which will run this diverse business and will also have the right to show the channels of this combined entity to subscribers for its soon-to-be-launched broadband 4G service.

A trust called the Independent Media Trust (IMT) will invest the money on behalf of RIL in optionally convertible debentures to be issued by the holding company of Network18.

As part of the deal, Infotel Broadband Services, an RIL subsidiary struck an agreement with Network18 and TV18 to grant preferential access to its channels through the 4G broadband network it is rolling out across the country.

TV18 and Network18

The boards of TV18 and Network18 had approved plans to raise Rs 2700 crore each through two separate rights issues. TV18 is to raise money at a price of up to 40 per share, while Network18, which is the holding company of TV18 will raise it at a price of up to Rs 60 per share. The net amount to be raised is about Rs 4000 crore.

Network18 will use a portion of the money, about Rs 1,300 crore, to invest in the TV18 rights issue and maintain its shareholding at about 50%. The remaining will be used to bring down its debt of about Rs 1777.89 crore. TV18 will use a portion of the money, about Rs 2100 crore, to buy the Eenadu channels and become debt free.

Eenadu

Eenadu is one of the country's largest media companies and operates several regional language news and entertainment channels. It also operates the highly successful Telegu language news and entertainment channel.

RIL  invested about Rs 2600 crore in Eenadu channels. It owns 100% economic interest in ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Urdu and ETV Bihar. It also owns 100% economic interest in ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya. In the Telugu channels, ETV Telugu and ETV Telugu News, RIL's economic interest is 49%.