Reliance Industries is consolidating its media and distribution properties under a single entity, making Network 18 the vanguard of the conglomerate’s advance in the media and entertainment business.
India’s largest private sector company by market value said that, as a result, Network 18, one of India’s largest listed media companies, will become an entity with about Rs 8,000 crore in annual revenue and benefit from substantial economies of scale.
“The aggregation of a content powerhouse across news and entertainment (both linear and digital) and the country’s largest cable distribution network under the same umbrella shall boost efficiency and exploit synergies, creating value for all stakeholders,” Reliance said in a statement on Monday after the boards of TV18 Broadcast, Hathway Cable & Datacom, Den Networks and Network18 Media & Investments met to approve the consolidation.
For every 100 shares they own, shareholders of TV18 Broadcast will receive 92 shares of Network 18. Hathway shareholders will get 78 shares of Network18 and Den shareholders 191 shares of Network18.
TV18 Broadcast owns the largest news network in the country under the News18 brand and is also the majority shareholder in the entity which owns the Colors network of entertainment channels and video streaming service Voot. Together Hathway and Den are India’s top cable platform, controlling 30 percent of the market. Network 18 owns India’s top finance app Moneycontrol as well the country’s largest regional language news destination news18.com. The combined broadband entity will serve nearly one million wireline broadband subscribers.
Network 18 would be the largest listed media company by revenue for the first nine months of the 2019-20 financial year, edging out Zee Entertainment and the Sun TV network.
“An integrated media play shall further increase the breadth as well as the depth of the group’s consumer touchpoints, and allow for retaining a larger share of the consumer’s spend on content,” Reliance said.
The broadcasting business will be housed in Network 18 and the cable and internet broadband businesses will be wholly-owned subsidiaries of Network 18, with February 1, 2020, as the appointed date for the merger. Network 18 will be net-debt free at the consolidated level.
Reliance, whose interests include telecommunications, retail, oil, refining, and petrochemicals, has been announcing a series of steps to deleverage its businesses and simplify its structure. In August 2019, Chairman Mukesh Ambani announced declared that Reliance would be net-debt free by March 2021. In October, Reliance consolidated all its digital businesses under a wholly-owned subsidiary.
“The reorganization furthers the group strategy of building a media powerhouse that is agnostic across pipes, platforms and screens,” Reliance said.
The Reliance Group’s holding in Network18 will reduce from 75 percent to 64 percent once the merger is completed.
The valuation report for the share exchange ratio was provided by BDO Valuation Advisory and MSKA & Associates.
The release noted that Network18 , along with affiliates, shall have leading positions across the growing media and distribution landscape in India.
The release noted that the consolidated entity would have 13 percent share of TV viewership. It would offer 56 channels across news and Entertainment, spanning 15 languages.
The release also noted that it would have a 12.5 percent share of India’s cable and satellite pay-subscriber base, a 6.7 percent share of the country’s wireline broadband subscriber base, with its presence across 18 states.Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.