Reliance Industries? funding of debt-ridden TV18 Broadcast to buy Hyderabad-based Eenadu Television marks a rare instance where a corporate house has invested for strategic reasons in a media company in India, beyond just financial reasons.
?RIL needed entertainment content for its 4G foray, while TV18 needed funds to repay its debt; so the deal was structured well to suit needs of both companies,? says Timmy Kandhari, leader, media and entertainment practice at consulting firm PricewaterhouseCoopers.
Most corporate investments in the media industry have been either private equity or banking deals.
The RIL investment is different because both parties are looking to leverage their strengths in the respective sectors.
Earlier in 2010, Reliance Capital, part of the Anil Dhirubhai Ambani Group, bought 18% stake in Bloomberg UTV. Before that, it bought 32% stake in TV Today Network by buying 8.1 million equity shares. It also acquired majority stake in Synergy Communications, owned by Siddhartha Basu, and owned 6.27% in Global Broadcast Network, part of the TV18 Group.
Tata Capital, the financial arm of the $83 billion Tata Group, bought 3.1 lakh equity shares in print media entity Jagran Prakashan. Private equity firm Blackstone Capital Partners had also invested around R225 crore in Jagran Media.
Religare Securities, another private equity player, bought 1.55% stake in south Indian Raj TV Network, while the KK Birla Group holds 69% stake in print media HT Media, currently valued at R834 crore.
In April 2011, DE Shaw Group, a $20 billion investment and technology development company, picked up a 14.2% stake in Prannoy Roy-owned broadcast company NDTV through foreign institutional investors Merrill Lynch and Nomura.
?But most of these corporates invested in order to get return on investment, not much for operational purposes,? says Jehil Thakkar, executive director, media and entertainment, KPMG India. ?This is the first big partnership where both RIL and Network 18 stand to gain from each other?s assets. The only other strategic deal was when Anil Ambani bought out multiplex chain Adlabs, because he wanted to build a diversified media and entertainment business,? he adds.