Reliance Makes Major Foray Into Media Sector

Reliance Industries Ltd (RIL), controlled by Mukesh Ambani, on Tuesday Jan 03,2012  announced its entry into the media business. RIL has struck a multi-tiered deal that can eventually give it a major equity stake in the Network18 Group, which operates a host of TV Channels  - CNN-IBN, CNBC-TV18 and Colors.
To begin with, Network18 Group will pay Rs 2,100 crore to acquire Eenadu’s Regional Language News and General Entertainment TV Channels.RIL will first invest about Rs 1,700 crore into the Network18 group. TV18 and Network18, the two listed companies of the group, will use this investment along with capital from other investors to retire debt and buy out a large part of RIL's stake in Eenadu, the regional language news and entertainment business run by Ramoji Rao, the Hyderabad-based media industry veteran. 
The two businesses will then come together creating a portfolio of 25 channels which will deliver a plethora of programmes to audiences ranging from village folk in Rajasthan to business executives in a Mumbai penthouse. 

RIL will get a stake eventually in the holding company which will run this diverse business and will also have the right to show the channels of this combined entity to subscribers for its soon-to-be-launched broadband 4G service
RIL will indirectly fund the acquisition by bankrolling two of Network18’s Promoter Group firms —
Network 18 Media and Investments and TV 18 Broadcast Ltd —
through optionally convertible bonds. A trust called the Independent Media Trust  (IMT) will invest the money on behalf of RIL in optionally convertible debentures to be issued by the holding company of Network18 owned by Raghav Bahl.
The two promoter group firms will offer rights shares to raise Rs 2,700 crore each to fund the acquisition and reduce debt.Network18 Media & Investment and TV18 Broadcast will offer the rights shares that will fund TV18 Broadcast’s purchase of all of ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar and ETV Urdu. It will buy 50 per cent of ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya and 24.5 per cent in ETV Telugu and ETV Telugu News.
In return, the Reliance will get preferential access to content from TV18 which can then be distributed through Reliance subsidiary firm Infotel, which is setting up a 4G wireless broadband network across the country. Infotel Broad Band Services, a subsidiary of RIL, has also entered into a pact with TV18 and Network18 for preferential access to all their content for distribution through the 4G broadband network being set up by Infotel.According to the pact, Infotel will have preferential access to the content of all the media and web properties of Network18 and its associates and programming and digital content of all the broadcasting channels of TV18 and its associates on a first right basis as a most preferred customer.

Despite the cash infusion, Founder and Promoter Raghav Bahl will retain a 51 per cent stake and management control over the TV18 Group