Network18 Media & Investments Limited (d/b/a Network18 Group) is an Indian media conglomerate owned by the Reliance Industries with 56.89% share headed by Mukesh Ambani and rest of 43.11% is equity holding. Rahul Joshi is the managing director, chief executive officer and group editor-in-chief, and Adil Zainulbhai is the chairman of its board of directors.
Incorporated in 1996 by Geeta and Rakesh Gupta, the company was acquired by Ritu Kapur and Raghav Bahl to be converted into a conglomerate holding company between 2003 and 2006. It oversaw one of the largest collections of media properties in India following its conversion but became encumbered with debt due to aggressive expansions. In 2012, the company entered into a debt agreement with Reliance Industries, through which it was granted a number of channels from the ETV Network. The agreement eventually enabled a hostile takeover of the company in 2014.
History
1996–2007: Acquisition and restructuring SGA Finance and Management Services was incorporated on 16 February 1996, as a private limited company by Geeta and Rakesh Gupta and acquired soon afterwards by Vidya Devi and Anil Jindal. The company had remained inactive without any clear prospects until it was later acquired by the promoters of Television Eighteen India Limited.
The news broadcasting company Television Eighteen (TEIL) founded by Ritu Kapur and Raghav Bahl, became a public limited company in 1999 and its initial public offering (IPO) received an overwhelming response. The investments through the IPO exceeded the target set by the company by a magnitude of over 50 times by the end of the year, raising in the process. This decreased the promoters' stake in the company from 75% to 26.11% by 2002 causing complications. The company was in the middle of preparations to launch a Hindi business news channel but could no longer meet regulatory guidelines. TEIL was in a joint venture with CNBC since 1998, and the news channel to be launched was called CNBC Awaaz. The guidelines required the Indian promoters to have more than 51% stake in their company to be able to establish a new uplink for broadcasting.
In 2003, SGA Finance was acquired by Ritu Kapur and Raghav Bahl, in to order to launch the channel and Bahl became its managing director. The company raised through two batches of investments from the two promoters in March 2003 and in January 2004, and then incorporated a subsidiary called SGA News. In the meantime, the government introduced a 26% foreign equity cap in the news broadcasting industry. In response to the new regulations the joint venture with CNBC was discarded and the partnership converted into a content branding and franchise agreement. In the financial year 2004–2005, TEIL invested in SGA News for preferences stocks. CNBC Awaaz was launched on 13 January 2005.
In the financial year 2005–2006, TEIL supplemented its initial investment with an additional in SGA News for common stocks. Following this, the boards of both the companies proposed a restructuring which received approval from the shareholders. The companies underwent several rounds of restructuring which came to a conclusion in November 2006. TEIL became a subsidiary of SGA Finance, the promoters gained a majority stake in TEIL, CNBC Awaaz was transferred to TEIL and shareholders of TEIL were accommodated with a stake in SGA Finance. On 20 October 2006, SGA Finance was converted into a public limited company and re-incorporated as Network18 Fincap Limited.
During the restructuring process, TEIL had also founded a subsidiary called Global Broadcast News (GBN). GBN had entered into a franchising partnership with CNN Worldwide to launch the English general news channel CNN IBN in December 2005. Bahl was able to convince several senior professionals working at the leading news broadcaster NDTV including their editor-in-chief Rajdeep Sardesai and the chief financial officer (CFO) Sameer Manchanda to join the enterprise before its launch. Haresh Chawla, the CEO of TEIL and Network18 was instrumental in both convincing Sardesai to quit and Bahl to take on NDTV as their competition. Due to the restructuring, Network18 instead of TEIL was allotted the shares of GBN and by the end of the financial year 2006–2007, Network18 held both GBN and TEIL as its subsidiaries; GBN operated CNN IBN and TEIL operating all the business news channels along with the information websites Moneycontrol and News Wire. Network18 was converted into a public limited company in 2006, and listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in 2007.
2007–2011: Expansion, consolidation and increasing debt Global Broadcast News (GBN), the subsidiary operating CNN IBN became a publicly traded company in January 2007 and its IPO generated a successful response, similar to that of Television Eighteen India Limited (TEIL). GBN was renamed as IBN18 Broadcast, and on 1 December 2007, Network18 Fincap itself was renamed to Network18 Media & Investments. Network18 began diversifying with cross media interests in 2008. It had high liquidity and expanded rapidly, it started the film production house called Indian Film Company (IFC), launched the shopping channel Home Shop18, and entered into an franchise agreement to launch the Indian edition of the Forbes business magazine, while IBN18 Broadcast entered into a joint venture with the Marathi language newspaper Lokmat to launch the Marathi news channel IBN Lokmat, and began a joint venture with ViacomCBS to initiate the group's foray in mass media and general entertainment channels under Viacom18.
Network18 registered losses in the financial years 2008–2009 and 2009–2010. Its investments had outstripped the profits generated by its operational assets. In addition, the group had existing debt obligations and requirements for providing returns to its investors which resulted in net losses of and respectively. Viacom18 in particular was a drain on the company's funds. The financial statement of the company in 2009 had reported that it was retiring outstanding debt and raising funds through equity investments. In response to the financial challenges, the group began restructuring and consolidating its assets in the same year. IBN18 Broadcast was renamed to TV18 Broadcast and Television Eighteen India Limited (TEIL) which operated the business news channels of the company was merged into it. The digital media and publishing operations were transferred to the parent company Network18 under the divisions of Web18 Software Services and Network18 Publishing respectively.
In the financial year 2010–2011, Network18 registered a loss of , which was a considerable decrease from the previous two years and Bahl reportedly told the shareholders during the presentation of the annual report that "the best times are still ahead of us". In 2010, Network18 went on to announce a new joint venture AETN18 with the American media company A&E Networks to launch History TV18, the Indian edition of History channel. The company had also entered into a distribution joint venture with the Sun Network called Sun18. It had 2 divisions named Sun18 North and Sun18 South, the former was managed by Network18 and the latter by the Sun Network. The joint venture was later restricted to Tamil Nadu and replaced by the TV18–Viacom18 distribution joint venture IndiaCast in 2012. The consolidation of assets was completed by 2011 but it alone could not mitigate the financial challenges. Over the past years, the market had changed rapidly, the group was facing increased competition from other broadcasters, and advertising revenue had decreased due to economic downturn.
2011–2014: Takeover by Reliance Industries Network18 had made optimistic projections for years but after 2011, it came to face a possible financial collapse and loss of control for its managing director Raghav Bahl. The group had accumulated an outstanding debt of over by September 2011. Employees were convinced that the company had expanded too aggressively and the market could not support it. In search of assistance in the form of external financing, Bahl decided to begin talks with the multinational energy giant Reliance Industries.
In November 2011, the CEO, Haresh Chawla resigned despite having been one of the founders of the media conglomerate. According to company insiders, he was persistently trying to convince Bahl to not enter into a debt agreement with Mukesh Ambani and instead raise funds by divesting part of the group's stake in the subsidiary Viacom18. In a later interview, he had commented that his resignation was an easy decision as he did not want anything to do with the Ambanis. According to a senior editor at the group, the decision to enter the talks was made reluctantly, as "[Bahl] was in a bind about entering a pact with the devil".
On 3 January 2012, Reliance Industries Limited (RIL) and Network18 announced a partnership. Reliance Industries set up a body called the Independent Media Trust (IMT) and infused funds into the company through a number of shell companies as part of a complex financial transaction. was transferred to Network18 and TV18 Broadcast, half the amount to each respectively, of which Network18 received a net amount of due to its stake in TV18. The shell companies gained rights to debentures convertible to equity within 10 years. RIL also forced Network18 to buy its stakeholding in ETV Network for a sum of without which the net sum would have been for a much smaller amount. The purchase also included two regional broadcasters; Panorama and Prism. The acquisition included most of the television broadcasting properties of the Ramoji Group. The group retained the rights to ETV brand, while Network18 acquired 100% shareholding of 5 general news channels, 50% shareholding of 5 general entertainment channels and 24.5% shareholding in 2 other channels. The entertainment channels were held by the joint venture of Viacom18. One point of disagreement for Chawla had been in the valuation of ETV at when the company was worth only in March 2011.
The transaction was completed in 2013, and turned Network18 into the largest group of media companies in India, surpassing Star India owned by the billionaire media mogul Rupert Murdoch and The Times Group owned by the Sahu Jain family. The broadband subsidiary of RIL, Infotel signed a memorandum of understanding with the group and gained preferential access to its content. In the form of a passive investor, RIL had indirect control over the company, and authority over its financial decisions. The executives retained operational control of the company. On 12 November 2012, IMT passed a resolution which allowed two senior officials from RIL to be appointed as additional trustees and Bahl lost further control within the trust. IMT held the option of converting the debentures to equity which could turn RIL into the majority shareholder of Network18.