THE Mukesh Ambani-led Reliance Industries Limited’s (RIL) acquisition of substantial equities in media companies in the last few years is not the first instance of a business conglomerate investing in media groups. Many business groups have owned media organisations in the pre-liberalisation era, but the alarming frequency with which corporate companies with interests in different business sectors have invested in existing media groups marks a trend that became noticeable only in the past two decades.
RIL made one such investment when it “bailed out” the Raghav Bahl-led Network18-TV18 group. RIL invested Rs.1,700 crore in the media company through a promoter company and RIL’s subsidiary Independent Media Trust (IMT) and in return gets preferential access to content from TV18, which runs television channels such as CNN-IBN, CNBC-TV18 and Colors. RIL intends to route this content through its subsidiary firm Infotel Broadband Services Ltd, which is setting up a 4G wireless broadband network across the country.
The RIL-Network18-TV18 alliance was made through a complicated series of deals in which many subsidiaries of both the companies got into a chain of financial transactions in 2012. Effectively, it involved RIL bailing out a debt-ridden Network18 and TV18. According to informed sources, RIL facilitated and funded the process of transfer of its equity shares worth Rs.2,100 crore in the Ramoji Rao-founded Ushodaya Enterprises, a group that runs the ETV television channels, to the Network18 group. In the process, RIL managed to free the Rs.2,600 crore that it invested in the Eenadu group in 2008, a deal that had become redundant for RIL in the present circumstances.
Raghav Bahl told the media then that this deal would help both RIL and the Network18 group raise a net amount of Rs.4,000 crore, with which his company would be able to retire its outstanding debt of Rs.2,116 crore as of September 2011. “By inducting such a significant amount of equity, our balance sheets will become among the strongest in the industry. Also, by acquiring this strategic control over several ETV channels, TV18 will have a bouquet of leading television channels,” Raghav Bahl had said to the media.
Ostensibly, Reliance does not have any control over the Network18 group as it does not hold any equity shares in the company. However, IMT secured convertible debentures in the deal, which have every possibility of turning into equities, financial analysts point out. In effect, RIL will have a major stake in a cross-media enterprise, which will help it gain control over both the Network18-TV18 group and the Eenadu television network.
Ramoji Rao, the founder of a Telugu daily and the ETV network, was bailed out by RIL in 2008 when his chit fund company, Margadarsi, was under probe. It was alleged that the company had collected Rs.2,600 crore from the public without timely repayments to its depositors. At such a stage, RIL bailed out Rao through two companies, Equator Trading and Anu Trading, controlled by Nimesh Kampani and Vinay Chajlani respectively, according to a petition filed by the late Andhra Pradesh Chief Minister Y.S. Rajasekhara Reddy’s wife, Y.S. Vijayalakshmi, in the Andhra Pradesh High Court in October 2011 seeking a probe into the assets of Telugu Desam Party chief N. Chandrababu Naidu. Many believed that RIL bailed out Ramoji Rao for his proximity to Chandrababu Naidu. The companies, the petition said, invested Rs.2,600 crore in the loss-making Ushodaya Enterprises, the parent company of ETV.
The journalist Paranjoy Guha Thakurta did a series of exposes on RIL’s “illegal” financial transactions with a company that runs an English news channel.
The alleged transactions have been linked to corporate entities controlled by the lobbyist Niira Radia, a Mauritius-based associate of the multinational investment firm New Silk Route (whose founders include Rajat Gupta and Raj Rajaratnam, who have been found guilty of insider trading charges in the United States) and a gas transportation company that was a subsidiary of RIL, Thakurta writes in a detailed report in the website www.thehoot.org.
Direct venture
In the 1980s and early 1990s, RIL ventured directly into the media business and not through indirect channels as it is doing at present. “It had bought a Bombay business weekly called Commerce and turned it into the daily Business & Political Observer ( BPO ). It poached a lot of journalists on huge salaries from the Times group. Reliance was almost forced to start BPO . Indian Express carried many stories attacking its policies and corrupt practices in those times. It needed a vehicle like BPO to publish its own viewpoint,” said the senior journalist Sukumar Muralidaran.
RIL started BPO to exercise political influence, but in the present times it has evolved a business strategy where it can gain both profit and influence while investing in media groups. The financial crunches that media groups faced because of the economic recession helped RIL devise this strategy. In the process of such “bailing out”, media groups are being consolidated under RIL. Some people even call Mukesh Ambani the new media mogul.
Talking about the surrogate ownership of media groups, the media expert Sevanti Ninan writes in one of her articles: “Token rules exist for both the print media and television: there is a Form IV declaration that all publications are required to publish once a year. It stipulates naming all those individuals and companies holding more than 1 per cent stake in the ownership of that publication. What it does not require to be declared is what percentage of stake those parties hold. So you cannot judge whether any of the declared owners has controlling shares.”
While in the pre-liberalisation era corporates owned media groups directly, the newsroom was still considered more or less sacred. However, with such surrogate ownership taking over media groups, as in the case of RIL’s acquisitions, the independence of the newsroom is constantly under threat.
In one of the cover stories of the monthly magazine Caravan, journalist Rahul Bhatia narrates in detail the rightward shifts in the editorial policy of Network18 after RIL bailed the group out of its financial stress. “Glancing at a sheet of paper he had arrived with, he (R. Jagannathan, the editor-in-chief for web and print at Network18) yelled at the room: ‘You’re doing it wrong. Forbes is about the wealthy. It’s about right-wing politics. You guys are writing about development and poverty. If you guys don’t get it, I’m going to make sure that you do’,” Bhatia writes. He goes on to write how important stories in which RIL could be seen negatively and its political clout could have been firmly established were killed.
More recently, a deputy editor of an English news channel posted a series of tweets ostensibly implying the gag order on saying or writing against the Bharatiya Janata Party’s prime ministerial candidate Narendra Modi. Nikhil Wagle, editor at IBN-Lokmat, TV18’s Marathi news channel, too posted a tweet: “Dangerous alliance of corrupt communal politicians n crony capitalists in this country. Want to muzzle the media. But we will fight back. (sic).” Sources in CNN-IBN confirmed such rightward shifts in the TV18 group.
In early 2013, Anil and Mukesh Ambani, putting aside their mutual differences, signed a pact, the impact of which could have been tremendous. Under this, Reliance Jio, RIL’s telecom arm, will pay RCom Rs.1,200 crore to use its 120,000-kilometre nationwide optical fibre network for the roll-out of 4G services. This deal was later cancelled, with RIL accusing the Anil Dhirubhai Ambani Group of not respecting the agreement. So, RIL planned to lay down its own optical fibre network through its company Infotel.
This could mean a total convergence model in which all the satellite services to one’s home, including Internet and television streaming, will be controlled by one business group. Not only could it help create a monopoly of the Reliance group over these services, but the company could very well dictate the flow of information to homes and offices, considering how it is slowly consolidating its positions in various media groups.
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