Network18 and TV18 announce Rights Issues

04 Jan,2012

By A Correspondent

 

Network 18 Media & Investments Limited, at the board meeting held on Tuesday, approved a Rights Issue of Equity Shares to raise an amount up to Rs 2,700 crore at a price to be determined by the Board in compliance with regulatory requirements, but not exceeding Rs 60 per equity share.

 

TV18 Broadcast Limited has approved a Rights Issue of Equity Shares to raise an amount up to Rs 2,700 crore at a price to be determined by the Board in compliance with regulatory requirements, but not exceeding Rs 40 per equity share.

 

Network18, being the promoter and holder of majority equity in TV18, would be subscribing to about Rs 1,400 crore in the TV18  rights issue – therefore, once this subscription amount is netted out, the Net Aggregate Rights Issue of both Network18 and TV18 will result in a fund raising of about Rs 4,000 crores.

 

The contribution of the current Promoter Entities of Network18 in this Net Aggregate Rights Issue of both Network18 and TV18 will be about Rs 1,700 crores.

 

TV18 will utilise the Rights Issue proceeds to repay the existing debt, fund the acquisition of ETV channels and fund working capital needs. Network18 will utilise the Rights Issue proceeds to repay the existing debt and subscribe to the Rights Issue of TV18.

 

The promoters of Network18 will be subscribing to their entitlement in full. They also reserve the right to subscribe to any unsubscribed public portion of the Rights Issues.

 

Raghav Bahl, the founder and promoter of Network18 and TV18, has informed that promoter companies have entered into an arrangement with Independent Media Trust, a trust set up for the benefit of Reliance Industries Limited, to secure the funding required for this purpose. Further, Mr Bahl will continue to retain the management and 51 per cent control over Network18 and 51 per cent control over TV18 through Network18.

 

Both the Companies will be filing the Draft Letters of Offer for their respective Rights Issues shortly.

 

Mr Bahl said: “This is a truly seminal moment in the 18-year-old history of Network18/TV18. By inducting such a significant amount of equity, our balance sheets will become among the strongest in the industry. Also, by acquiring this strategic control over several ETV channels, TV18 will have a bouquet of leading television channels. Riding on the imminent digital wave, I am convinced that this acquisition is a significant move which will catapult TV18 into the forefront of India’s broadcasting industry. The proposed preferred access arrangement with Infotel Broadband will ensure that our content & services will be available on India’s premier technology distribution platform. On a debt free basis, both Network18 and TV18 hope to strengthen their position in various media segments like news & entertainment broadcasting, consumer internet, digital & print publications, filmed entertainment, home-shopping, e-commerce and other emerging businesses.”

 

The Board of Directors of TV18 Broadcast Limited (TV18) during its meeting also approved the acquisition of 100 per cent interest in Hindi news channels, 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).

 

TV18 will have the Board and management control of ETV news channels and ETV non-Telugu GEC Channels. The Board has approved an outlay of up to Rs 2,100 crores for this acquisition. Legally binding agreements will be executed for this purpose. TV18 has an option to buy the balance 50 per cent interest in ETV non-Telugu GEC channels and an additional 24.5 per cent in ETV Telugu channels.

Ernst & Young Pvt Ltd acted as advisors for financial and tax due diligence and valuation of the assets. The legal due diligence was carried out by Khaitan & Co.

 

ETV is among the Top 5 most popularly viewed networks in the country. It was one of the first entrants in the regional markets and the channels have a considerable viewership base. One of the key strengths of ETV channels is their ability to attract and retain loyal viewers.

 

On a combined basis, TV18 will be offering a unique mix of national and regional channels, catering to diverse genres like Hindi and regional entertainment, general news in English, Hindi and regional languages; business news in Hindi, English and regional languages; music, kids, devotional and infotainment channels.

Including the soon-to-be-launched services/variants, this combined bouquet of over 25 channels will be the most powerful and potentially profitable TV operation in the country, especially since India’s television industry is on the verge of a digital revolution.

 

As a part of the deal for acquisition of ETV Channels, Network18 and TV18 have also entered into a Memorandum of Understanding with Infotel Broadband Services Limited, a subsidiary of Reliance Industries Limited, under which the companies and their associates will have the right to distribute the content of all the media and web properties of Network18; and programming and digital content of all the broadcasting channels (including the ETV channels being acquired by the company) through 4G Broadband Network of Infotel, which shall have preferential access to this content on a first right basis as a most preferred customer.

 

Infotel Broadband Services Limited is setting up a pan-India world class broadband wireless network, using state of the art technology. As per Images Year Book, more than 70 per cent of India’s population is below 35 years, and 50 per cent of the population is below 25 years of age. This young educated population will be keen to access quality content through wireless devices, thereby ensuring a rapid growth in subscribers similar to the growth of tele-density in India during the last ten years.

 

The key advantage for millions of viewers will be the ability to enjoy an uninterrupted, high quality, 24-hour viewership, even while they are on the move. This tie-up with Infotel will enable Network18 and TV18 to build on their first-mover advantage for the distribution of their content through the latest broadband technology.

 

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