In another deal that points towards consolidation in the Indian media industry, Essel Group and Dainik Bhaskar (DB) Group that together owned equal share in Diligent Media at the time of its inception in 2005 to launch an English daily, DNA, in Mumbai have come to an agreement, wherein Essel will buy out Bhaskar Group’s entire stake in the JV (joint venture).
It is understood that the deal is done and in principle, Essel’s complete control of DNA is effective. The official announcement is pending for formalities that can take anywhere between “a few more days to a few more weeks” to be in place.
There is also an expectation that Essel may consider to launch DNA in Delhi soon to further build on the brand.
Essel’s move to strengthen its control in Diligent Media has been seen, in measured steps, over the years.
At the time of DNA’s launch in 2005, Bhaskar Group had both management and editorial control of DNA. But in 2009, Subhash Chandra, Chairman, Essel Group took charge of DNA’s operations. Around the time, Bhaskar Group’s 50 per cent stake in Diligent Media was diluted in Essel’s favour. While the figure was not made public, it was understood that Bhaskar’s stake was down to a minority of 38-40 per cent. This enabled Essel to leverage synergies with its media companies and DNA’s revenue function was aligned with the sales might of Essel Group’s television operation, Zee Entertainment Enterprises (ZEE).
As Essel gears to buy the remaining Bhaskar Group stake from the company, it is also readying to invest further to bring DNA on a growth path. A company official pointed out, “Essel is completely committed to DNA and will invest whatever it takes to grow the business. This is a business with potential and this year a breakeven is expected at DNA.”
While Chandra of Essel Group was not available for comments on the subject, a highly placed company source confirmed Essel’s complete control of DNA to exchange4media, adding that the move does not imply any management changes at the company that is currently run by KU Rao as its CEO.
The expectation of breakeven is good news for the company that is seen as a loss making business. DNA’s launch in the media industry had seen it impact the monopoly of The Times of India in Mumbai, which is the single strongest market for TOI, but over the years, players such Hindustan Times and even tabloids such as BCCL’s Mumbai Mirror have asserted their presence with strong readership numbers. Mid Day saw renewed charge after its takeover by the Jagran Prakashan in 2010.
Media observers pointed out that one of the reasons why Bhaskar Group may not be pursuing its initial interest in DNA was because of DB Corp’s focus on tier II and tier III markets. “DB Corp’s presence in metros doesn’t match up to the extensive and aggressive presence the paper has in other markets,” said an analyst.
For Essel on the other hand, DNA makes sense, given Essel’s vast presence in media including Hindi news broadcasting. While Essel’s focus on DNA is expected to result into interesting developments in the English newspaper space in Mumbai and other metros, on an overall media industry level, it adds to the examples that the industry is looking at consolidation in various ways.