Sun TV Network has suffered severe setbacks due to the Ministry of Home Affairs (MHA) not granting the security clearance to its 33 TV channels. Adding to the Network’s woes is the recent action taken by the Ministry of Information and Broadcast (MIB) of not including Sun TV’s FM radio brands Red FM and Suryan FM in the phase III radio auctions. This issue, which has dragged on for a month and half, has seen a drastic impact on the company’s stock price which has reduced to almost 38%. While the stock price closed at Rs.356.35 on Friday, June 5, 2015 prior to news of the MHA denying Sun TV the security clearance, on Monday, June 8, 2015 it slipped to Rs.278.9 on the BSE index. Though it managed to climb up to Rs.333.55 two weeks later, it once again slipped even lower to now currently at the price of Rs.258.35.
In terms of market capitalisation (market cap) Sun TV Networks stocks have seen a big loss to the tune of over Rs.7,737.8 crore on both the stock markets combined. The market cap of Sun TV Network declined by Rs.3,862 crore in the BSE. It declined by Rs.3,875.8 crore in the NSE. (The market cap is the number of outstanding company shares into the share price of the stock)
We had reported earlier that the losses on the company’s stocks extends to around Rs.6,000 crore, out of which promoter Kalanithi Maran is estimated to face a loss of around Rs.4,500 crore said S L Naryanan Group Financial Officer, Sun Group in a recent media report.
While the Ministry of Information and Broadcast (MIB) stance initially seemed likely towards favouring the network and hence the possibility of it getting the license for 33 TV channels and 45 FM radio stations, the MIB is now showing signs of going with the MHA’s decision. According to some media reports, MIB sources say that they are likely to stick to the MHA line of thought and final call will be taken by I&B Minister Arun Jaitley.
This comes on the heels of the MIB not allowing Sun TV’s FM brands Red FM and Suryan FM to participate in the Phase III auctions. The auctions were one of the most anticipated events in the radio broadcasting space and the Sun TV FM brands were expected to be big players. Red FM has now approached the Delhi High Court against this decision.
With MIB moving to support the MHA’s stance on the radio auctions, media experts say it is likely that MIB might go the same way for the TV licenses.
Sun TV Network has however not taken this sitting down and has raised important questions against the government’s stance against many of the other players in the broadcast sector with pending cases against them. It accused the union government of favouritism for other players which includes the Anil Ambani Group receiving clearance for licenses despite facing similar charges in the 2G scam in a letter by promoter Kalanithi Maran to Home Minister Rajnath Singh. It mentions the large business conglomerates which have pending cases such as 2G spectrum, corporate espionage at ministry of petroleum, corruption involving disproportionate assets and extortions. Media reports also said that another letter by K Shanmugam to Singh elaborated on the reference of Reliance Broadcast Media and provided details of cases where ADAG officials have been booked.