A sudden hostile takeover of the India’s largest news channel media house Network 18 by RIL is the news of the town today and it is pronounced as the death of Media Independence by the leading news dailies in India. According to the available information India’s largest company Reliance Industries Ltd., which is owned by India’s richest man Mukesh Ambani, announced that it was taking over one of India’s largest media companies–Network 18 Media and Investments Ltd.
Network18 owns TV channels (including CNBC TV18, CNN-IBN, CNN Awaz), websites (firstpost.com, moneycontrol.com), magazines (including the license for Forbes India), entertainment channel (Colors, MTVand Homeshop Entertainment) among other businesses. RIL officials revealed that the board approved funding of 4,000 crore rupees (or roughly $730 million) to Independent Media Trust (IMT), of which RIL is the sole beneficiary” for taking over Network18.
The founder and managing director of the company Network 18 Mr. Raghav Bahl announce his exit from the company along with other directors, CFO, COO, there are strong rumors that news channels top editorial team is also on its way out. This entire process is described as the hostile takeover. This takeover is also considered as the strategy of RIL who is expected to roll out its 4G network later this year and will use the wide range of contents produced by the network 18 to feed its telecom launch.
In its press release RIL said: “The acquisition will differentiate Reliance’s 4G business by providing a unique amalgamation at the intersection of telecom, web and digital commerce via a suite of premier digital properties. This takeover, once combined with RIL’s telecom business, makes the combined group likely bigger than media baron Rupert Murdoch’s empire in India and bigger than any other media group in India. And that should raise some serious questions about it.
Paranjoy Guha Thakurta, an independent journalist and teacher who was a member of the Press Council of India where he co-authored a piece on “Paid News: How corruption in the Indian media undermines democracy.” Said “If India’s biggest corporate conglomerate is also India’s biggest media company, what does it do to diversity of opinion, plurality of opinion, what it does do to unfavorable news coverage?”
Though India has several thousand newspapers and about 900 tv channels and a flourishing social media. Despite that, there are only a handful of media companies that dominates the market and mainstream media still has a significant role in setting the agenda. “What happens when big business interests get into the media business?” says Thakurta. “They influence what comes out into the public, what is heard and read…. [Suddenly] You have your large business groups, conglomerates determining what people read, hear, and watch. It does raise concerns and questions about what happens to the voices of not just those who are contrary to RIL, but the marginalized.”
The Network18 deal may be the biggest media deal in India, but it is a very tiny part of the giant that is RIL. The deal is important for other reasons, points out P. Sainath, an independent, award-winning journalist. “It has the power to reach into every drawing room; the power to tell you what to read see and think,” he says. “How will they [the Network18 journalists] have any chance of doing a decent story on the KG gas deal [where RIL has the rights to dig for gas and is in dispute with the government], the Radia tapes [taped telephone conversations between publicist Nira Radia and a former telecom minister and senior journalists where she’s lobbying on behalf of several big corporate clients], how will they cover any damn thing? The greater the monopolization and corporatization of media, the less the space for smaller voices, differing voices, dissenting voices.”
The story goes back into the past when RIL made its first investment in Network18 in January 2012 with a minority stake in the company via IMT. At the time it said it was merely an investor, recalls Thakurta. “Now that Chinese wall has come crashing down,” says Thakurta. “Earlier the people who were investors are now the people who call the shots.”
[pullquote-right]With Mukesh Ambani taking over Network 18, the space for disseminating a diverse range of views could shrink, feels Paranjoy Guha Thakurta.[/pullquote-right]
The critics have also raised concerns about how this will impact the media’s coverage of India’s newly elected government. India’s corporate sector endorsed and donated to Narendra Modi and the BJP’s election campaign. So what are the chances that media companies owned by the same corporate houses will encourage independent reporting of its favored Prime Minister and government? “Once upon a time the media took its role to question people in power very seriously,” says Sainath. “Media was the adversary. It would take on those in positions of power, whether in government or the corporate sector. Time alone will tell how that adversarial role will exist under these sorts of corporate deals.”
Why RIL Acquired the Network 18
Media deals are rarely as complicated as this one between Mukesh Ambani’s and the Raghav Bahl. The deal involves Ambani bailing out the debt-ridden Raghav Bahl the founder and chairman Network18 and TV18 with an investment of Rs.3,800 crore in return for preferential access to Network18 and TV18’s content. Media industry was aware that soon, he (Ambani) will buy controlling stake in the media company. This turned out to be true as gradually Ambani started making small investments in the media firm. In what is a stroke of genius, Ambani has wrested ‘control’ of a large part of Indian electronic media with an out-of-the-box swap strategy.
The deal is complex. Apparently, Ambani will not ultimately own any equity in Bahl’s companies, both of which are listed entities. Instead, Bahl will end up merely ‘transferring’ Rs.2,100 crore worth of Ambani’s equity in the Andhra Pradesh-based Eenadu TV media group to his companies. In the process, Ambani has managed to extract Rs.2,600 crore he invested in 2008 in Ramoji Rao-founded Ushodaya Enterprises. On the surface it appears to be a win-win situation for Bahl, but in reality it is clear that Ambani has a vice-like grip on both Eenadu and TV18 operations. This is why the RIL-owned Indian Media Trust has given a commitment to cover any shortfall in the rights issue.
The fact is that most media companies in India, as well as across the world, are performing poorly mainly for two reasons. The finances of traditional media organizations have been squeezed because of the deceleration or fall in advertising expenditures in the wake of the Great Recession. Secondly, the exponential growth of the internet that is making huge volumes of information available almost free, is acting as the proverbial double-whammy on the fortunes of much of the corporate media. If the financial state of the media is indeed all that precarious, why should RIL be expanding its footprint over the Indian media? The answer is not too difficult to find: control over the media implies more political clout which, in turn, translates into greater power to influence economic policies and shape public opinion.
Ambani is never been in favor his direct presence in media but this mysterious 2008 venture is a break with the past. In one fell swoop, Ambani has carved up a swathe in the Indian media. He is in the mood for more. With a war chest of Rs.67,000 cr, Ambani is the new media mogul.
