RIL buys 1.14% in distribution firm, DEN networks

20 Jan,2012

By Rajesh Naidu & Ameya Chumbhale

 

Reliance Strategic Investments, a subsidiary of Reliance Industries, has bought a 1.14% stake in DEN Networks, one of the two listed cable distribution companies in India. As RIL has acquired interests in media firms dealing with content, it makes sense for the Mukesh Ambani-controlled group to invest in a distribution network now, several analysts told ET.

 

RIL recently sold its stake in Ramoji Rao-promoted Eenadu regional channels to TV18 Broadcast, a subsidiary of media conglomerate Network18 Media & Investment. Through the deal RIL would have preferential access to the content of all the media properties of Network18 and its associates and its subsidiaries-these include digital media and the TV18 channels.

 

“This may be the beginning of strategic investments in cable distribution companies as they will need huge sums to invest in digitalisation, as mandated by the government,” said Mr Devendra Parulekar, partner at Ernst & Young India. Another analyst who did not want to be named said RIL could increase this stake to 15% soon and then proceed towards buying out the promoters’ stake.

 

Mr Parulekar said, “The digitalisation law will ensure steady revenues from cable distribution and this revenue remains steady even when there are recessionary trends in the markets.”

 

On Wednesday, DEN’s stock went down by 0.78% to 63.75 while Hathway shot up by 7.84% to 136.

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

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