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Mukesh Ambani funds Network18’s acquisition of ETV channels

RIL to invest in Network18 and TV18 rights issues to enable full content access for Infotel’s 4G broadband services. Multi-layered deal to make Network18 debt-free

BestMediaInfo Bureau | Delhi | January 4, 2012

In a multi-layered share deal announced on Tuesday, Reliance Industries Ltd (RIL) is divesting a part of the interest owned by it in the Eenadu Group owned ETV Channels to TV18 Broadcast Ltd (TV18). As part of the deal, Infotel Broad Band Services Ltd (Infotel), a subsidiary of RIL, has entered into a Memorandum of Understanding with TV18 and Network18 Media and Investments Ltd (Network18) for preferential access to all their content for distribution through the 4G Broadband Network being set up by it.

Simultaneously, the board of directors of TV18, at its meeting held on Tuesday, approved the acquisition of 100 per cent interest in Eenadu’s regional news channels in Hindi, namely, ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan and ETV Bihar and ETV Urdu channel (ETV news channels); 50 per cent interest in ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya (ETV non-Telugu GEC channels), and 24.5 per cent interest in ETV Telugu and ETV Telugu News (ETV Telugu channels).

To put it simply, Mukesh Ambani’s RIL will sell a portion of its stake in Eenadu TV to Raghav Bahl-promoted Network18 for Rs 2,100 crore in cash. Interestingly, RIL-promoted Independent Media Trust will fund the buyout of its own stake.

On their part, Network18 and TV18 will both go in for a rights issue of Rs 2,700 crore each to raise Rs 5,400 crore. The money for the rights issue will be funded by the Ambani controlled media trust.

In other words, the Ambani trust fund will fund the Network 18’s structured buyout of stakes in the various Eenadu entities currently owned by Muskesh Ambani. And in turn, Ambani, through his trust fund, will buy significant stakes in Network18 and TV18.

With the complete execution of the complex deal, the heavily leveraged Network18 Group will become debt-free. TV18 will have board and management control of ETV news channels and ETV non-Telugu GEC channels.

Ambani’s interest in the deal stems from the fact that through this mechanism, Infotel will get full access to content from the Network18 and TV18 group that runs channels like CNBC TV18, CNN IBN, the various websites, and the Eenadu news and GEC channels, etc. Infotel is setting up a pan-India world class broadband wireless network using state of the art technology. Network18 and TV18 expect Infotel to become one of the leaders in content distribution through broadband technology.

To enable this, Network18 and TV18 have signed an MoU with Infotel under which it will preferential right to distribute the content of all media and web properties of Network18 and programming and digital content of all the broadcasting channels (including the ETV channels) through 4G Broadband Network of Infotel.

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