Why media purists needn’t worry about Kumar Mangalam Birla’s 27.5 % in Living Media

21 May,2012

By Pradyuman Maheshwari

 

On April 10, the TV Today network clarified to the Bombay Stock Exchange on rumours that the Aditya Birla group was acquiring a stake in the India Today group. The clarification said the Company (TV Today) was not aware of any such transaction and was not in a position to confirm the contents of the media reports.

 

A little over a month later, the same organization sent the BSE a copy of the press release stating that 27.5 per cent of Living Media India, better known as the India Today group, was sold to the Aditya Birla group.

 

A senior member of the AV Birla group told this correspondent that the investment was made by chairman Kumar Mangalam Birla on a personal level and not by any of the group companies.  After the customary approvals in a few months, we would get to know the real numbers. Late on Friday, Ashish Bagga, recently appointed CEO of the entire group (including TV Today), informed staff of the development by way of an email.

 

The question which everyone wants to know is the price that Mr Birla paid for the 27.5%. There have been various figures floating around… that the money paid is in the region of Rs 350-500 crore. In the communique issued, Mr Birla is quoted saying: “The media sector is a sunrise sector from an investment point of view. I believe that Living Media India offers one of the best opportunities for growth and value creation.”

 

Also read:

AV Birla group buys 27.5% in India Today group

 

Birla may use personal money for buy, Mail Today may now launch editions in Mumbai, other metros

 

Loss of plurality is worrying: Paranjoy Guha Thakurta

And here’s what Aroon Purie, chairman of the India Today group said: “I am delighted to partner with the Aditya Birla group to aggressively address the current and future potential of the Indian media business which is at a tipping point. The Aditya Birla group with its strong leadership global footprint, diversified business interests and its shared values of integrity, commitment and social responsibility make it a perfect fit with the India Today group.”

 

So where’s the money going to be used? For one, it would mean expanding its current businesses. Specifically, Mail Today to move to markets like Mumbai and other cities and for TV Today to get into the regional space, and possibly a business channel. With a question mark on overall growth of newsmagazines, Living Media needs to invest its resources on segments with a growth potential.

 

It has already done so by investing in smaller, niche magazines which have a smaller print run and attract fair amount of advertising as also bringing in international content.

 

The TV Today network has also been in pressure in recent months with competition gaining ground. The radio station -Oye 104.8 – also needs to grow on the ratings roster.

 

And what does it mean for the industry? Although a 27.5% equity will give Mr Kumar Mangalam Birla a toehold in media, it’s not significant enough for him to wrest editorial control. However, while there is fear of how big business money may impact the media, the fact is that it is already doing so. Even today, there exist managements and editors which buckle under pressure from large advertisers and influential individuals. There are enough stories of vested interests at play in Indian journalism, and for the media as a whole, the infusion of money from big business houses and foreign players could possibly ensure better salaries and hence lesser corruption. Standards of journalism are bound to improve.

 

Also, it’s not that business empires haven’t been in the media already. The KK Birla group runs Hindustan Times, the Tatas would own the Indian title of Reader’s Digest until it sold to Living Media and there are other smaller players too who are known to back media players. Zee TV’s Subhash Chandra has a successful enterprise running under the Essel brand and even The Times of India group’s Jains have had long-standing interests in other fields.

 

Since the media needs to increase scale, it needs the money for expansion. A route followed by some groups like Dainik Jagran, Dainik Bhaskar and Deccan Chronicle has been to go public. Still others – like Network 18 and Television 18 – have been public and also secured investment. Last year, the Abhey Oswal group bought 14.17% in NDTV.

 

The Reliance Anil Ambani group has significant presence in the media with radio and television. It has also acquired a majority stake in business channel Bloomberg UTV. Just yesterday (Sunday, May 22), one saw a programme airing consumer complaints with a subscribers’s peeve against Reliance Communications. So it’s not that Bloomberg UTV blanks out all criticism of Reliance ADAG activities.

 

According to me, more than the possibility of business empires exerting pressure after investing in the media, the worry is when the situation reaches oligopolistic proportions. This has in fact been seen with media groups having a stake in allied business like radio, television and events.

 

Buzz me if you have a story to tell. Confidentiality assured. There are various ways you can reach me:

pradyumanm[at]mxmindia.com, BBM 23050B5D, Gtalk pradyumanm@gmail.com, Twitter @pmahesh and of course the mobile: 98338 76278.

 

Disclaimer: Although he is CEO and Editor-in-Chief of this site, Pradyuman Maheshwari’s views in Mediaah! are not necessarily those of the rest of the team and MxMIndia.com.

 

 

 

 

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One response to “Why media purists needn’t worry about Kumar Mangalam Birla’s 27.5 % in Living Media”

  1. Asif Syed says:

    “Standards of journalism are bound to improve.”!!
    Yeah right.

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