Mukesh Ambani allies with TV 18 for TV biz
Raghav Bahl’s firm to make rights issue of Rs 2,700 cr
Mukesh Ambani group’s flagship company, Reliance Industries (RIL), on Tuesday, announced that it will sell a part of its stake in the regional ETV Channels to TV18 Broadcast Limited. 
However, RIL was not forthcoming on the size of the stake being sold nor the amount being paid, but Network18 and TV18 said in a joint statement that they will become debt-free by the end of this exericse.
RIL said that it will also fund a rights issue by TV18 Broadcast’s founders as part of a deal to gain exclusive access to content for fourth-generation broadband wireless services being launched by Reliance unit Infotel Broad Band Services Ltd.
For this purpose, RIL will set up an independent trust which will fund the founders of Network 18 and TV18 for subscriptions to a proposed Rs 2,700 crore rights issue each announced by both the companies on Tuesday. The trust will have eminent individuals as Trustees to enable preserving the management, operational and editorial independence of these media companies.
Reliance’s Rs 2,600 crore investment in ETV, run by the Eenadu Group, comprises of a 100 per cent interest in news channels, a 100 per cent interest in entertainment channels and a 49 per cent interest in Telugu-language channels, a RIL statement said. A part of the above investments comprising of 100 per cent interest in News Channels, 50 per cent interest in entertainment channels and 24.50 per cent interest in Telugu channels is being profitably divested to TV18 Broadcast Limited, it said.
The Network 18 group had embarked on a massive expansion spree funded largely by debt to cater to the growing demand for entertainment and news content in the country. As of March 31, 2011, Network 18 had total debt of Rs 1,782 crore while TV18 had total debt of Rs 551 crore, as per data from FactSet.
However, TV18, in a release issued to BSE, said its board had approved an outlay of Rs 2,100 crore for the acquisition of 100 per cent of five ETV regional channels, a 50 per cent interest in another five regional channels and a 24.50 interest in ETV Telugu and ETV Telugu News.
As a part of the deal, RIL subsidiary Infotel Broad Band Services has entered into a pact with TV18 and Network18 Media and Investments Limited (Network18) for preferential access to all their content for distribution through the 4G Broadband Network being set up by it.
It may be noted that Infotel is setting up a pan India world class 4th Generation Broadband Network using state-of-the-art technologies. It expects to take a leadership position in content distribution through broadband technology through a host of devices.
Industry observers say that RIL will leverage its deep understanding of the Indian markets - consumer insights, technological expertise and the ability to build & manage scale - to make this a “win-win” partnership. This will create value and be accretive to the shareholders of RIL.
Raghav Bahl and his team will continue to have full operational and management control of both the companies. Also, Bahl and the current promoter entities of Network18 and TV18 will continue to retain control over Network 18 and TV18.
With this, a combination of India’s leading TV content provider, with a bouquet of nearly 25 channels, and Infotel, will be a significant step in bringing a high quality “live TV” experience to broadband customers across the country.
Similarly, Network18’s market-leading web portals and e-commerce operations will provide several value-added services to Infotel’s broadband subscribers. This alliance is expected to differentiate Infotel and create value for all stakeholders.
