MUMBAI: Network 18 Media and Investments said it has received board?s approval for divesting its stakes in Yellow Pages and AskMe as part of its plan to monetise non-core assets profitably.

AskMe is Mumbai?s leading local search engine which allows online and telephonic search for companies, products and services while Yellow Pages is an online business directory that helps buyers find businesses.

The Raghav Bahl-promoted Network18 had earlier sold its entire 77.5 per cent stake in news terminal business NewsWire18 to private equity firm Samara Capital for Rs 900 million.

Before that the company had divested its 20 per cent stake in entertainment ticketing website Bookmyshow.com to venture capital firm Accel Partners for Rs 500 million. Network18?s stake in the ticketing website?s holding company Bigtree dropped to 40 per cent post the stake sale.

MUMBAI: The minimum amount of Rs 9.96 billion that Reliance Industries Ltd?s (RIL) Independent Media Trust (IMT) will lend to ensure the currently open rights issues of Network18 Media and Investments and TV18 Broadcast sail through will translate into a 51 per cent stake in the promoter companies of Network18.

IMT will lend the money through investments in zero coupon optionally convertible debentures (ZOCDs) issued by the six promoter companies of Network18, which will be subscribing to promoters? entitlement in the rights issues and in addition, to subscribing to the unsubscribed portion in the rights issues and to subscribe to additional equity shares.

The six promoter companies are RRB Mdiasoft, RB Mediasoft, RBI Media Holdings, Watermark Infratech, Colorful Media and Adventure Marketing, which together own 36.90 per cent of Network18. To subscriber to their entitlement, these companies require Rs 9.96 billion. To raise Rs 9.96 billion to subscriber to their entitlement, the promoter companies will have to issue a minimum of 99,630,000 ZOCDs.

By subscribing to their entitlement and unsubscribed portion, if any, in this Issue, the promoter companies will hold more than 36.90 per cent of the post-issue paid up equity share capital of the Issuer.

If the ZOCD holder opts for conversion of the minimum 99,630,000 ZOCDs, then it will result in the ZOCD holder holding more than 51 per cent of the promoter companies. In the event of conversion of the ZOCDs, there will be a change of control of the subscribing companies. Such change of control of the promoter companies may in turn result in a change of control in the company.

Considering that Network18 is already in control of TV18, the acquisition of control of Network18 by the ZOCD holder may consequently result in change of control of TV18. A change of control of the companies may significantly influence our business, policies, and operations, Network18 & TV18 have said in the rights issue prospectus.

Television channels that are owned by TV18 include news channels CNBC TV18, CNBC Awaaz, CNN IBN, IBN7 and IBN Lokmat, and general entertainment channel Colors and factual entertainment channel History TV18.

The promoter companies are owned and controlled by Raghav Bahl, Founder of Network18 group and Ritu Kapur.

Network18 is offering 307 shares for every 50 shares held by its shareholders at a price of Rs 30 per share, while TV18 is offering 41 shares for every 11 shares held by its shareholders at a price of Rs 20 per share.

The six promoter companies have confirmed vide their letter dated 29 February 2012 that they intend to (i) subscribe for additional equity shares and (ii) subscribe to the unsubscribed portion in the rights issue, if any. Such subscription to additional equity shares and the unsubscribed portion, if any, to be made by the promoter companies, will be in accordance with the Takeover Regulations and also shall not result in breach of minimum public shareholding requirement as stipulated in the listing agreements, Network18 and TV18 have said.

The promoter group holding in Network18 is 49.55 per cent, including 11.14 per cent by Network18 Group Senior Professional Welfare Trust and 0.40 per cent by TV18 Employees Welfare Trust. Network18 group owns 59.76 per cent of TV18.

The promoter companies each have a paid-up and issued share capital of Rs 0.1 million comprising 10,000 equity shares of Rs 10 each. As per the ZOCD Investment Agreement, the promoter companies will issue such number of ZOCDs to IMT to enable them to subscribe to their entitlement, additional Equity Shares and unsubscribed equity shares in the Issue with the proceeds of the ZOCDs. The investment agreement has provided that if the response to rights issue from non-promoter shareholders is poor, the promoter companies will subscribe to additional shares and also to the unsubscribed portion.

TV18 will be acquiring 100 per cent of the equity of Equator, which owns 100 per cent equity of Panorama, the owner of ETV News Channels; 50 per cent of Prism which owns ETV non-Telugu channels; and 24.50 per cent of Eenadu which owns ETV Telugu Channels.

Each ZOCD to be issued to IMT will be of Rs 100 each convertible into 10 equity shares of the respective promoter company. These ZOCDs are also freely transferable. The holder of the ZOCDs has the option to convert all or any of the ZOCDs into 10 equity shares for each ZOCD held, of the relevant promoter company at any time within a period of 10 years from the date of subscription of the ZOCDs by IMT.

Further, the holder of the ZOCDs has the option to require all or any of the promoter companies to redeem some or all of the ZOCDs at par at any time within a period of 10 years from the date of subscription of the ZOCDs. The ZOCDs which have neither been converted into equity shares nor redeemed shall be automatically redeemed at par upon the expiry of 10 years from the date of subscription of the ZOCDs.

MUMBAI: Raghav Bahl has taken the next big step to infuse capital into his two debt-laden leading companies and fund the acquisition of Hyderabad-based ETV that would help him spread his media empire into the fast-growing regional markets of India with the support of cash-rich Reliance Industries Ltd (RIL).

After getting the Sebi nod for going ahead with the rights issue, Network18 Media & Investments Ltd and TV18 Broadcast Ltd on Friday fixed the the price of their rights issues at a discount to their closing prices to raise Rs 26.99 billion each.

Network18 is offering 307 shares for every 50 shares at a price of Rs 30 per share, a discount of 5.66 per cent to its closing price of Rs 31.80 on the National Stock Exchange (NSE).

TV18 is offering 41 shares for every 11 shares held at a price of Rs 20 per share, a discount of 4.76 per cent to its closing price of Rs 21 on the NSE.

Since Network18 group owns 59.76 per cent of TV18, the net capital raised from the rights issues will be Rs 43.12 billion.

The funds to be raised from the rights issues are meant for TV18?s acquisition of ETV news and general entertainment channels, except the Telugu GEC from Reliance Industries Ltd (RIL) for Rs 21 billion. RIL will fund the Network18 promoter companies for subscribing to the rights issues and in exchange will get optionally convertible debentures issued by the promoter companies.

RIL will lend a minimum of Rs 17 billion through investments in optionally convertible debentures. If none of the non-promoter shareholders subscribe to the rights issue, RIL will have to lend Rs 43.12 billion to Network18 promoters to ensure both the rights issues go through.

The record date for Network18 shareholders is 12 September and for TV18 shareholders is 17 September. The Network18 rights issue will open on 18 September 18 and close on 4 October, while that of TV18 will open on 25 September and close on 15 October.

Both the issues are huge compared to their market capitalisation as of Friday. Network 18?s rights issue is nearly six times its market capitalisation of Rs 4.61 billion and that of TV18 is nearly 3.5 times the market capitalisation of Rs 7.78 billion.
 

MUMBAI: Raghav Bahl-promoted Network18 has demerged and consolidated the publishing business of Infomedia18 under ?Network18 Publishing? as per the scheme of demerger approved by the High Court of Delhi in 2011.

The printing press business will continue to remain with Infomedia18.

As per scheme of arrangement, Network18 was to issue and allot to the shareholders of Infomedia18 as on the record date, 7 (Seven) equity shares of Rs 5 each of Network18 for every 50 shares of Rs 10 each of Infomedia18. Meanwhile, shareholders of Infomedia18 will continue to hold their original shareholding in Infomedia18.

With the scheme in place, Network18 Publishing will encompass three divisions of Infomedia18?s publishing business - Business to Consumer (B2C) magazines, Business to Business (B2B) magazines and Business Directories Division (BDD).

In B2C, the titles that will now come under the Network18 Publishing umbrella are Overdrive, Overdrive Hindi, Entrepreneur, Better Photography, Better Photography Hindi, Better Interiors, CHIP, T3, AVMAX. In B2B- Search, Auto Monitor, Modern Machine Tools, Chemical World, Modern Plastics & Polymers, Modern Packaging & Design, Modern Medicare, Modern Pharmaceuticals, Modern Food Processing, Smart Logistics and Aftermarket will be part of Network18 Publishing. Meanwhile in Business Directories- Multi-city editions of Yellow Pages Business Directories, Machine Tool Guide, Indian Exporters Guide, Construction and Interior Design Guide, Industries State Guide and Motor Pumps & Valves directories will be now under Network18 Publishing.

Additionally, Network18 Publishing will also manage production and circulation operations for titles from the Forbes India stable which currently includes Forbes India and Forbes Life India.

Network18 Group CEO B Sai Kumar said, "We believe that the special interest and B2B spaces will be one of the key drivers for publishing in India, both in print and new media. With Network18 Publishing, we?ve aligned our assets to capitalize on this trend both from a community building as well as a commercial perspective. Going forward, as publishing models develop, this alignment will significantly enhance our market proposition."

Sandeep Khosla, who was earlier CEO-Publishing at Infomedia18 will be heading the new devision as its CEO.

Khosla added, "As Network18 Publishing, our growth strategy will evolve in line with an increasingly multi-platform publishing environment. Considering the strong traction of our brands in key consumer and business communities, our focus will be on leveraging this across areas including print, new media, on-ground activation and value-added services. We hope to build on this further by maximising synergies with group platforms and in the process deepen engagement with our audiences and aid monetisation of our brands."

MUMBAI: Raghav Bahl is restructuring his media and entertainment companies under three operational heads as he gears up for expansion after getting Reliance Industries Ltd (RIL) to indirectly invest in it.

Forming IndiaCast, a distribution company that houses content syndication as well, Bahl has got individual heads to shepherd the entertainment, news and distribution businesses that are entering a new growth phase.

Bahl‘s broad plan could be to bring the ETV regional entertainment channels under Viacom18 operational management while its news entities will be under TV18, a source familiar with the development says.

It is not clear yet if this operational structure will be allowed to transition into an equity arrangement. For this to happen, media conglomerate Viacom will have to agree to invest and induct the ETV entertainment channels into the joint venture company, Viacom18, where it holds 50 per cent stake.

"Nothing has been finalised yet. Viacom, no doubt, will be happy to have the regional GECs under Viacom18. A lot will also depend on how RIL wants the structure to evolve. But there are other issues as well," the source says.

As part of the plan to fortify its regional presence, TV18 acquired partial ownership in the broadcasting assets of Eenadu after valuing it at Rs 21 billion. With the purchase, the company has got 100 per cent stake in 5 regional news channels of ETV (where RIL has 100% interest), 50 per cent stake in 5 regional GEC channels excluding Telugu (where RIL has 100% interest) and 24.5 per cent stake in ETV Telugu channels (where RIL has 49% interest). The news channels include ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan, ETV Bihar, and ETV Urdu. The regional GECs are ETV Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and ETV Oriya.

The restructuring exercise comes in the wake of these developments and the exit of Haresh Chawla who functioned as Network18 and Viacom18 Group CEO.

"The role of Chawla was too unwieldy as he had full control of all the group companies . After his exit, a restructuring was needed keeping in mind the growth plans," the source explains.

Network18 Group has a combined turnover of Rs 19.52 billion that includes 50 per cent of Viacom18 (Colors, MTV, etc), the news channels under TV18 (CNBC TV18, CNN IBN, IBN7, etc), the web properties and HomeShop18. As the company gears up to launch a Hindi movie channel (put on hold) and regional-language channels, a breakup in roles is the need of the hour.

"It wasn‘t practical for Chawla to oversee the whole of Bahl‘s empire. His operational role at Viacom18 at times was uncalled for and led to a quiet unrest," says a senior executive who has left the company on condition of anonymity.

Bahl Wednesday announced the hiring of Sudhanshu Vats, a senior executive at HUL, as the group CEO of Viacom18 Media. Under
 him will fall Colors, Comedy Central, MTV, Nick, Sonic, Vh1 and Viacom18 Motion Pictures. He has already recruited Anuj Gandhi, an industry veteran, to spearhead IndiaCast‘s growth.

Bahl‘s new structure will mean that the non-ad sales business falls under the care of Gandhi while Vats gets to groom the entertainment networks and Sai Kumar to directly nurse the news and web businesses while continuing his role as Network18 and TV18 Group CEO.

"Earlier, everybody was reporting to Chawla. Now the reality is that each of these lines of businesses need individual management and are too expanded to be operationally under one CEO," the source says.

Take IndiaCast, for example. The new distribution company, under which also resides the syndication business, is already having a turnover of Rs 4.30 billion. Bahl‘s ambition is to scale this up to the size of the biggies, particularly in a digital environment where there is going to be exponential growth in subscription revenues. Zee Entertainment Enterprises Ltd (Zeel) reported domestic subscription of Rs 9.22 billion in FY‘12 and Rs 1.32 billion through other sales and services (syndication sales, playout & transmission services and facility usage income).

Bahl has given IndiaCast a wider playground, bringing under its umbrella content asset monetisation across geographies, platforms and mediums. The other channel distribution companies do not have such a broad canvass and content syndication falls outside their functional zones.

"Bahl believes that IndiaCast has enough leg room to grow and become a Rs 10 billion company over the next few years after digitisation of cable TV spreads," a media analyst at a broking firm says.

Vats will also have his plate full as the group expands its regional footprint and comes out with a Hindi movie channel and other entertainment products that are sure to launch in a digitised environment.

Kumar will have a tough task cut out for him as he tries to beat slow revenue growth for news channels. The web properties will 

also have to be guided to a scale that will make it comfortable for Bahl to tap the American market for raising capital through a public float.

After being rescued from a debt overhang by RIL, Bahl is laying out the new leadership structure that will provide fertile ground for new growth.

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