RIL is Consolidating Media & Distribution Businesses under Network18 Media & Investments Ltd

Introduction

Do you know Network18 would now be India’s largest listed Media Company? RIL is consolidating its media and distribution businesses under one entity – Network18 Media & Investments Ltd. This is the next big thing for Mukesh Ambani, Reliance Group.

Detailed Stock Analysis by Invest Yadnya

Network18 Media & Investments Ltd – India’s Largest Listed Media Company

Reliance Industries Ltd to Merge TV18, Hathway & Den Networks with Network18

Reliance Industries Ltd (RIL) announced a consolidation of its media and distribution businesses spread across multiple entities into one entity – Network18 .

. Under the Scheme of Arrangement, TV18 Broadcast, Hathway Cable & Datacom and Den Networks will merge into Network18 Media & Investments.

The appointed date for the merger shall be February 1, 2020.

The broadcasting business (TV18 Broadcast) would be housed in Network18, while the cable and distribution business (Hathway Cable & Datacom and Den Networks) would sit in two separate wholly owned subsidiaries of Network18.

Network18 Group – Business Outlook

Network18 Group – Business Outlook

Source : www.nw18.com

The major key businesses of Network18 group is shown above.

Network18 – Shareholding Pattern (Dec-19)

Earlier, before the consolidation, the shareholding pattern of Network18 Media 7 Investments was as above. Here, the promoters group – Reliance Industries was holding a stake of 75%.

% holding of FIIs, Mutual Funds and Public were 3.9%, 1.3% and 19.8% respectively.

Reliance Industries Ltd’s stake in Network18 would reduce to 64% from 75% after this merger.

Share Exchange Ratio

According to the share exchange ratio approved by the board, shareholders will get : 92 shares of Network18 for every 100 shares of TV18 78 shares of Network18 for every 100 shares of Hathway Cable & Datacom 191 shares of Network18 for every 100 shares of Den Network



Benefits of Consolidation of Media & Distribution Businesses into Network18

In November, Japanese major Sony Corporation had initiated preliminary talks with Network18 for a possible stake buy, making it the second attempt by Sony in a year to seek local acquisition. It had earlier sought to acquire stake in Zee, but had failed to do so. The merger of RIL’s media and distribution businesses into Network18 would create an ecosystem for growth opportunities in digital, broadcast media, cable, and broadband.

The restructuring shall create value-chain integration in the overall consolidation of Media and Distribution businesses. The scheme will also simplify the corporate structure of the group by reducing the number of listed companies.

Also, as a result of this consolidation, Network18, which is one of India’s largest listed media companies, will become an entity with about Rs.8,000 Crore in annual revenue and benefit from substantial economies of scale.

The combined broadband entity will also serve one million wireline broadband subscribers across the country. Besides, shareholders of all the four companies will also benefit from streamlining of operations and strategy, focused management, and reduction of risk through consolidation.

An integrated media play shall further increase the breadth as well as depth of the group’s consumer touch points and benefit from capturing entire subscription revenues within Network18 which was earlier spread between broadcasting and distribution entities.

The merged entity will be net debt free (at the consolidated level) and can allocate free cash flow to the businesses as and when required. It can also provide a base for growth and better shareholder returns.

This might also bring the company closer to bringing a strategic investor or Private Equity to provide value unlocking to Network18.