Monday, June 25, 2012

Reliance controls Network18 group indirectly, says CCI

Business Standard

Regulator rules that RIL is the exclusive beneficiary of the trust that controls the media house. The Competition Commission of India (CCI), has said the largest listed company indirectly controls the group that owns the largest business news channel in the country.In a recent order clearing the three-way deal between Reliance Industries (RIL), the Network18 group and ETV, CCI said "considering these facts, it is evident that control of IMT (Independent Media Trust) rests with RIL. In view of the foregoing, RIL is considered the acquirer of control over target companies, which, in turn, results in indirect acquisition of control over Network18 and TV18."
The CCI order has put focus on the appointment of Reliance Industrial Investments and Holdings (RIIH), a fully-owned subsidiary of RIL, as the 'protector' of IMT. Under trust law, a protector is a person appointed under the trust deed to direct or restrain the trustees in relation to their administration of the trust. IMT will hold RIL's investments in the Network18 group, according to the deal inked in January. Earlier, Network18 had said in a filing with the Securities and Exchange Board of India (Sebi) that Nilrab Media, jointly owned by Network18 Managing Director Raghav Bahl and his wife, Ritu Kapur, would be the trustee of IMT.


However, as protector of the trust, RIIH would have the power to remove and appoint the trustees of IMT, thus giving the former's parent, RIL, an indirect control of the media group itself, the CCI order said."In terms of the trust deed establishing IMT, RIL is the exclusive beneficiary of IMT. Further, RIIH, a wholly-owned subsidiary of RIL, is designated as the protector in the trust deed. The protector is authorised to remove the trustees at any time, and, upon such removal, it is lawful for the protector to appoint other person(s) as trustees," the order said.(Click here for chart)


The CCI order came after the parties intimated the details of the deal through a notice in March. According to the order, "it has also been stated in the notice that the commission may construe RIL, being sole beneficiary of IMT, is acquiring the target companies and indirect control over Network18, TV18 and Equator Trading." The notice disclosed a series of acquisitions that were interconnected and/or interdependent on each other and had the ultimate intended effect of RIL acquiring control over the Network18 group. The commission has considered all these acquisitions as one composite transaction.In response to an email sent to Bahl, the Network18 legal head, Kshipra Jatana, said: "We would clarify that in the current transaction, RIL or IMT is not acquiring any control whatsoever in Network18 or TV18."


According to Jatana, "in evaluating the effects of a transaction on competition and consumer interest, CCI is bound to take the most conservative view and test the case. In fact, that's why, under the Competition Act, an "acquisition" of an enterprise includes acquiring "convertible security" (without voting rights) of the enterprise and even such an acquisition has to pass through the test of evaluation of appreciable adverse effect on competition. Thus, the Competition Act contains deeming acquisition in a sense. This is at variance with other statutes that recognise acquisition only when there is actual acquisition of voting rights or control". She added: "Thus, to interpret the CCI order without the context of its statutory provisions would be incorrect interpretation. The order covers specific provisions of the Competition Act and a different interpretation would be wrong."


An email sent to an RIL spokesperson did not elicit any response. In a press release announcing the deal in January, RIL had said: "Mr Raghav Bahl and his team will continue to have full operational and management control of both the firms. The investments in these media properties are being made by RIL through an independent trust that will have eminent individuals as trustees, preserving the management, operational and editorial independence of these firms."


Network18 Media & Investments Limited is an Indian mass media company with interests in television, print, internet, film, mobile content and allied businesses. Network 18 FinCap is the holding company for several media entities in India such as Television Eighteen India Ltd (TV18), IBN 18 Broadcast Ltd, Web 18, Studio 18,Shop 18,Infomedia 18 and Viacom 18. Raghav Bahl holds 51% shares of Network 18 Group. The group includes Network18, TV18, ibn18 and Infomedia18.


Companies

  • TV18 is a listed company which runs business news channels CNBC-TV18 in English and CNBC Awaaz in Hindi and owns most of Web 18. In 2006 it acquired CRISIL Market Wire which was renamed Newswire 18.
  • Network 18 holds 57% in IBN 18 Broadcast Ltd, headed by Rajdeep Sardesai, which runs general news channels CNN-IBN in English, IBN-7 in Hindi and IBN-Lokmat in Marathi in JV with Marathi newspaper Lokmat. GBN in turn owns a small stake(15%) in Web 18.
  • Web18 is an unlisted umbrella company for all Network 18 web properties such as moneycontrol.com, in.com, ibnlive.com, josh18.com, cricketnext.com, commoditiescontrol.com, tech2.com, poweryourtrade.com, easymf.com, compareindia.com, firstpost.in and upcoming women's and automotive portals. The company also owns stakes in Jobstreet (India), Yatra.com and BookMyShow.com.
  • Studio 18 is a newly formed division of Network 18 for film production and financing.
  • HomeShop18 launched the Home-shopping television network.
  • Webchutney, a digital marketing agency.
  • InfoMedia 18, a media company with business Directories, Magazine Publishing, Printing Services and Publishing Outsourcing services.
  • The company also owns Viacom 18,which has channel like Colors TV,MTV India,Nick India and VH1 India. Viacom 18 has plans to launch a Hindi movie channel and some regional-language channels in near future.
  • Sun 18 -In 2010 it entered into JV with Sun Network to distribute its channels through cable, DTH, IPTV, HITS and MMDS.Sun18 Media Services North and South were formed. Sun 18 South focuses on the non-Hindi-speaking markets and is managed by the Sun Network.Sun 18 North focuses on the rest of Indian markets and is operated by the Network18 Group. 

List of companies

  • TV18, a joint venture of Network18 and NBCUniversal
  • Infomedia 18
  • IBN 18 Broadcast Ltd.
  • Viacom 18, a joint venture of Network18 and Viacom
  • Web18
  • E18

Network TV channels

  • CNN-IBN, JV of IBN 18 Broadcast Ltd and Turner International India
  • IBN-7, an IBN 18 Broadcasting Ltd Channel
  • CNBC Awaaz, JV of CNBC Asia & TV18
  • CNBC-TV18, JV of CNBC Asia & TV18
  • IBN-Lokmat, JV of Lokmat & TV18
  • MTV India, a Viacom 18 channel
  • Nick India, a Viacom 18 channel
  • VH1 India, a Viacom 18 channel
  • Colors, a Viacom 18 channel
  • HomeShop18, a TV18 Channel
  • Topper, an Educomp 18 channel
  • History TV18
  • ETV Network

Internet Offerings
in.com, launched on 21 July 2008 brings the best of news,songs,videos and games. Within a few months of its launch the site became very popular as India's leading general interest web destination. It was number 2 Indian website according to comscore September 2008 data.
moneycontrol.com is Asia's largest and world's second largest financial and business portal providing real time coverage on market movements, key expert insights and discovering intrinsic dynamics between the various market participants. It has more than 1 million registered users and receives more than 150 million page views per month.


firstpost.com - Online news website meant to be accessible across multiple digital platforms
poweryourtrade.com is a financial advisory portal giving expert advices,market news and analysis to investors and traders commoditiescontrol.com brings its user a deep understanding of the Indian commodity space. It has first hand information of prices from over 100 spot markets making it one of the most credible commodities information and research service provider in India.


Cricketnext.com, launched in 2000 provides loads of volume and information about the cricketing events around the globe.It has many interactive features like daily poll question, celebrity chats and discussion boards.


Compareindia.com provides customers free information on the product they want to buy.The site contains 37 product categories: Audio systems, televisions, washing machines, microwave ovens, refrigerators, fax machines, photocopiers, and printers, amongst others.
tech2.in.com gives the news of latest happenings in the technology world. It also contains expert reviews of the products coming out from the technology world.


homeshop18.com is a nationally televised home shopping service, which uses interactive electronic media, primarily through cable TV and internet to sell credible brands.It acquired online books, movies and music retailer Coinjoos.com,which was started in November 2009 by the Noida-based technology start-up called On-Graph Technologies, in an all-cash deal.The company has plans to discontinue the Coinjoos.com brand and merge the books business of On-Graph Technologies with Homeshop18.com.

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