Reliance's plan to consolidate media, distribution businesses under N18 fail to fructify
Network18, TV18, Hathway Cable and Datacom and DEN Networks have announced that they are not going to proceed with the scheme of arrangement
Mukesh Ambani-helmed Reliance Industries Limited's (RIL) plans to consolidate its media and distribution businesses into Network18 has not fructified as Network18, TV18, Hathway Cable and Datacom and DEN Networks have announced that they are not going to proceed with the scheme of arrangement.
Under the Scheme of Arrangement, TV18 Broadcast, Hathway Cable & Datacom and DEN Networks were to merge into Network18 Media & Investments. The Appointed Date for the merger was 1st February 2020.
"This has reference to the captioned Scheme approved by the Board of Directors on February 17, 2020. The shareholders are aware that the Scheme was filed with both BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") for their no-objection letter," the four companies said in an identical regulatory filing to the BSE.
"The Company had also disclosed in its quarterly financial results for the quarters ended June 30, 2020, and September 30, 2020, that the stock exchanges had returned the Scheme stating that the Company may apply to the stock exchanges once the Scheme is in compliance with SEBI circulars I SEBI Regulations. This pertained to the compliance by Den Networks Limited and Hathway Cable and Datacom Limited of the Minimum Public Shareholding requirement.
"Considering that more than a year has passed from the time the Board considered the Scheme, the Board of the Company has decided not to proceed with the arrangement envisaged in the Scheme."
Reliance had plans to house the broadcasting business in Network18 and the cable and ISP businesses in two separate wholly-owned subsidiaries of Network18. TV18 shareholders were expected to get 92 shares of Network18 for every 100 shares they own. Hathway shareholders would have got 78 shares of Network18 for every 100 shares while DEN shareholders would have received 191 shares of Network18 for every 100 shares. It was also revealed that Reliance’s holding in Network18 would have reduced from 75% to 64% upon implementation of the Scheme.
It is pertinent to note that Reliance Industries had recently announced that it will sell stakes in its cable distribution platforms Hathway Cable and Datacom and DEN Networks to comply with SEBI's minimum public holding norms. The conglomerate had plans to sell stakes for Rs 853 crore and Rs 269 crore in Hathway and DEN respectively through an offer for sale (OFS).
Jio Futuristic Digital Holdings Private Limited, Jio Digital Distribution Holdings Private Limited, and Jio Television Distribution Holdings Private Limited being part of the promoter & promoter group of the company had agreed to sell an 11.63% stake in DEN and a 19.09% stake in Hathway. The promoter and promoter group held 94.09% and 86.53% stakes in Hathway and DEN respectively.
While announcing the scheme of the arrangement, Reliance had said that the restructuring will create value-chain integration, and render substantial economies of scale. It had also said that the scheme will simplify the corporate structure of the group by reducing the number of listed entities.
The aggregation of a content powerhouse across news and entertainment (both linear and digital) and the country’s largest cable distribution network under the same umbrella will boost efficiency and exploit synergies, creating value for all stakeholders, the company had said.
Reliance had also said that Network18 will be an integrated media and distribution company with a revenue of Rs. 8,000 crore. It had also stated that the company will scale up as one of the largest listed players in the sector. Further, the company was expected to be net-debt-free at the consolidated level, providing a solid base for growth as well as improved shareholder returns.
The consolidation of cable businesses of DEN and Hathway in one entity would have allowed Reliance to leverage the combined strength of the 27000 LCO partners who act as the touchpoints to 15 million households in India.
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