Kumar Mangalam Birla may sell minority stake in India Today group

18 Aug,2014

By Arijit Barman & Arun Kumar


Two years after making a personal investment in the Aroon Purie-controlled Living Media India – widely known as the India Today Group – for a minority stake, Kumar Mangalam Birla may be planning to cash out. Multiple sources aware of the development said Birla, the chairman of the diversified Aditya Birla Group, has roped in Bank of America Merrill Lynch to help him find a buyer for his minority stake.


In May 2012 Mr Birla picked up a 27.5 stake in the New Delhi headquartered company that straddles the entire media chain, from television to magazines and a tabloid. Living Media Ltd is the holding company and also owns 57.2 per cent in TV Today Network – a listed company that controls the group’s broadcasting assets such as Aaj Tak and Headlines Today – besides the publishing ventures, including flagship India Today.


As per the 2012 agreement, Mr Birla’s holdings were not frozen but were linked to certain financial milestones that the group had to achieve. Currently, the sources cited earlier said, Mr Birla owns a larger equity stake, believed to be around 34-35%. They add that discussions with both strategic and financial investors like private equity funds have been ongoing for a while now. Several leading business groups now have investments in domestic media corporations and more are keen to get a foothold, making this an interesting opportunity.


The option of selling the stake back to the Purie family is also a possibility. Neither Mr Birla nor the India Today Group have ever disclosed the quantum of investment. While some say so far Mr Birla has pumped in Rs 700 crore, others speculate that the amount is half that, around Rs 350-Rs 400 crore. A Birla Group spokeswoman refused comment on what she termed as “market speculation”. The Bank of America Merrill Lynch spokesperson also declined comment.


Even though Mr Birla’s decision has come as a surprise to many, people familiar with his thinking say Mr Birla feels that the government might impose restrictions on media ownership by corporate houses. “Owning media assets can be a double edged sword for corporates.


Governments or political parties can misconstrue the strategic intent of the investment and any criticism or critical coverage can get the corporate owner in trouble. So even if a corporate gets into it, in most cases it would be either through indirect ownerships or personal investments as they would want to derisk the main businesses,” said a person familiar with the thinking behind Mr Birla’s investment. He spoke on condition of anonymity because of the sensitivity of the matter. “It was always a personal investment and there was no business angle to it. There was never any interference into editorial matters or with the management,” added another person, aware of Mr Birla’s investment philosophy with regard to Media.


Mr Purie’s publishing empire, controlled through Living Media, also includes Business Today, a business magazine, and a clutch of licensed magazines such as Cosmopolitan, Good Housekeeping, Men’s Health, Harper’s Bazaar, Travel Plus and Harvard Business Review, among others. It also has a joint venture with German media house, Axel Springer AG, for an auto magazine and an online shopping portal: Bag it today. Additionally, a joint venture with UK-based Daily Mail brings out the tabloid Mail Today.


TV Today has four news channels – Headlines Today, Aaj Tak, Tez and Delhi Aaj Tak – and radio stations under the brand Oye FM. In the June FY14 quarter, TV Today posted a profit of Rs 32.7crore on revenue of Rs 137 crore. It’s current market capitalisation is Rs 908.7 crore.


Interestingly, the Anil Ambani controlled Reliance Capital has been selling down its 7 year old exposure in TV Today.


From a peak equity holding of 14.9%, it has slowly reduced its stake, the latest such sale being in the first week of this month, when it offloaded nearly 4,80,000 shares for Rs 7.38 crore in the open market. With this, R-Cap’s stake in the company has fallen to five per cent.


Source:The Economic Times

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