PRITAM SENGUPTA in New Delhi and KEERTHI PRATIPATI in Hyderabad write: Media criticism in India, especially in the so-called mainstream media, has never been much to write home about.
Operating on the principle that writing on another media house or media professional means exposing yourself to the same danger in the future, proprietors, promoters and editors—most of whom have plenty to hide—are wary of taking on their colleagues, competitors and compatriots.
That risk-averse attitude amounting to a mutually agreed ceasefire pretty much explains why the biggest media deal of the decade—Reliance Industries Limited (RIL) funding Network 18/ TV 18 group to pick up ETV—has been reported with about as much excitement as a weather report.
That the newspaper which issues P. Sainath‘s monthly cheque, The Hindu, declined to publish media critic Sevanti Ninan‘s fortnightly column on market rumours about the impending deal (without telling readers why) provides a chilling preview of what lies in store as the shadow of corporates lengthens over the media.
In 2008, New York Times‘ columnist Anand Giridharadas wrote of why the Indian media does not take on the Ambanis of Reliance Industries in an article titled “Indian to the core, and an oligarch“.
“A prominent Indian editor, formerly of The Times of India, who requested anonymity because of concerns about upsetting Mr Ambani, says Reliance maintains good relationships with newspaper owners; editors, in turn, fear investigating it too closely.
“I don’t think anyone else comes close to it,” the editor said of Reliance’s sway. “I don’t think anyone is able to work the system as they can.”
First things first, the RIL-Network18/TV18-ETV wedding is an unlikely menage-a-trois.
Reliance Industries Limited is a behemoth built by Dhirubhai Ambani and his sons Mukesh Ambani and Anil Ambani using a maze of companies and subsidiaries built on a heady cocktail of mergers and demergers, using shares, debentures, bonuses and other tricks in the accounting book—and many beyond it.
The only known interest of the Ambanis in the media before this deal was when they bought a Bombay business weekly called Commerce and turned into the daily Business & Political Observer (BPO) to match the weekly offering, The Sunday Observer, which they had acquired from Jaico Publishing.
(Top business commentators like John Elliott and Sucheta Dalal have alluded to a blog item to convey that Mukesh Ambani’s media interest goes beyond the recent announcement.)
Anyway, BPO, launched under the editorship of Prem Shankar Jha, was long in coming unlike typical Reliance projects. Suffice it to say that in 1991, when India was at the cusp of pathbreaking reforms, some of India’s biggest names in business journalism were producing dummy editions of BPO.
The Ambani publications were under the gaze of the more media-savvy younger brother, Anil Ambani, who operated with R.K. Mishra, the late editor of The Patriot, as chairman of the editorial board. The Observer group shuttered before the beginning of the new millennium.
As Mani Ratnam‘s film Guru based on Sydney Morning Herald foreign editor Hamish McDonald‘s book The Polyester Prince makes clear, the Ambanis have always cultivated friends across the political divide, but they have been identified with the Congress more than the BJP.
Raghav Bahl‘s Network18/TV18 is in some senses an ideal fit for RIL.
Till its latest cleanup came about a year and a half ago, it was difficult to understand which of its myriad companies and subsidiaries came under which arm. It too has friends on either side, but suffice it to say, CNN-IBN‘s decision not to run the cash-for-votes sting operation in July 2008 revealed where its political predilections lay.
Eenadu and ETV, on the other hand, is a long, different story.
The ETV network of channels was launched by Ramoji Rao, the founder of the Telugu daily Eenadu. Rao has many claims to fame (including launching Priya pickles), but he is chiefly known as the media baron behind the transformation of the Telugu film star N.T. Rama Rao into a weighty non-Congress politician.
Rao and his men are known to have crafted speeches that tapped into dormant Telugu pride for the politically naive NTR. The massive media buildup in Eenadu—Ramoji Rao pioneered multi-edition newspapers with localised supplements—saw NTR become the chief minister of Andhra Pradesh just nine months after launching the Telugu Desam Party (TDP) in 1982.
Two years later, when NTR was removed from office by a pliant governor (Ram Lal) working at the behest of Indira Gandhi‘s rampaging government, Ramoji Rao played a key role in protecting the numbers of TDP MLAs by having them packed off to Bangalore and Mysore, and building public opinion through his newspapers.
When NTR’s son-in-law N. Chandrababu Naidu walked out of TDP to “save” TDP, Ramoji Rao backed Naidu and played a hand in his ascension as CM. Thus, Ramoji Rao galvanised non-Congress forces in the South leading to the creation of the National Front, which installed V.P. Singh as PM in 1989 after the Bofors scandal claimed Rajiv Gandhi.
In 2006, Ramoji Rao placed his political leaning on record:
“I submit that until 1983 the Congress was running the State in an unchallenged and unilateral manner for the past 30 years. The Congress party became a threat to democracy and in view of the single party and individual rule by Indira Congress, the opposition in the state was in emaciated condition. It has been reduced to the status of a nominal entity. The dictatorial rule of the Congress proceeding without any hindrance. I submit that as the opposition parties were weak and were in helpless situation where they were unable to do any thing in spite of the misrule by the ruling party, Eenadu played the role of opposition. I submit that in the elections of the State Assembly held in 1983, the Congress for the first time did not secure a majority in the elections and lost the power to the newly formed Telugu Desam Party. I submit that on the day of poling i.e. January 5, 1983, I issued a signed editorial on the front page of Eenadu supporting the manifesto of Telugu Desam Party and calling on the electorate to vote for Telugu Desam Party giving cogent reasons for the stance taken by me.”
In short, the marriage between RIL-Network18/TV18 and Ramoji Rao is one between a largely pro-Congress duo and a distinctly non-Congress one.
Indeed, Ramoji Rao’s troubles that has resulted in substantial sections of his ETV network getting out of his grasp and into RIL’s, are largely because of his consistently anti-Congress stance, which gained an added edge in 2005 when the Congress under Y.S. Rajasekhar Reddy (YSR) trumped the TDP under Chandrababu Naidu in the assembly elections.
Reported The Telegraph:
A slew of news reports in Eenadu and programmes on ETV since 2005 have accused Congress ministers, politicians and senior government officials of corruption and hanky panky. One report, for instance, debunked the official claim that the number of suicides by farmers had dropped. Another attacked construction by Y.S. Vivekananda Reddy, the chief minister’s brother, on disputed land. A third said that Eenadu had discovered, based on a survey, that voter lists for elections for local bodies had omitted the names of opposition party sympathisers.
It didn’t take long for YSR to hit back.
It was a two-pronged attack: his son Y.S. Jagan Mohan Reddy launched a project to own launch his own newspaper and newschannel house to take on the might of Eenadu and ETV. Simultaneously, a Congress MP from Rajahmundry attacked Ramoji Rao where it hurt most: his finances.
Arun Kumar Vundavalli, the MP, revealed that Rao’s Margadarsi Financiers had started dilly-dallying about repaying depositors, even after their deposit period had expired. Kumar showed that Margadarsi Financiers—a Hindu Undivided Family (HUF) company, of which the karta was Ramoji Rao—had collected deposits from the public, although a 1997 RBI law forbade HUFs from doing so.
Margadarsi Financiers owned a 95% stake in Ushodaya Enterprises, Ramoji Rao’s company which owned Eenadu and ETV.
A one-man committee of enquiry constituted by the Y.S. Rajasekhara Reddy government revealed that Rs 2,600 crore of money was collected from the public in violation of RBI norms. Although his companies were not in great shape, Ramoji Rao assured the Andhra Pradesh high court that he would repay the full amount of Rs 2,600 crore due to the depositors.
In January 2007, the world’s largest private equity player indicated that it wanted to pick up 26% in Ushodaya Enterprises group for Rs 1,217 crore. At the time, it was reported to be India’s single largest foreign direct investment (FDI) in the print media.
The Blackstone offer placed the value of Ramoji Rao’s company at Rs 4,470 crore.
But the FDI proposal got stuck in the I&B ministry for months, allegedly at the behest of Vundavalli, who raised a variety of concerns over the Blackstone-Eenadu deal. In January 2008, when the clearance for the Blackstone investment was still not coming, Mint asked:
“Does the promoter of an Indian company, who is selling a stake in his family’s media firm to a foreign investor, have the right to do what he wants with that money, in this particular case, pay off liabilities of another company that his family separately also owns?….”
“FIPB records then show that the finance ministry, specifically citing Vundavalli’s claims, ‘has observed that prima facie, it appears that the purpose of securing funds from M/s Blackstone is not for advancing the business of Ushodaya Enterprises Ltd, but for repaying the deposits taken by M/s Margadarsi Financiers.”
When the Blackstone deal did not materialise, Nimesh Kampani of JM Financial stepped in as Ramoji Rao’s white knight although, as Sucheta Dalal writes, Kampani was never known to have any interest in the media except in deal-making.
According to VC Circle, Kampani picked up 21% of Ushodaya Enterprises for Rs 1,424 crore, which valued the company at Rs 6,780 crore, or over 50 per cent more than what Blackstone was willing to accept.
“The first public report of Kampani’s investment came in early February 2008, or around 10 days after stock markets crashed globally.”
Now, YSR got after Kampani.
Andhra Pradesh police issued a “look-out” notice for Kampani. Nagarjuna Finance, of which Kampani had been director, had allegedly defrauded depositors. Although Kampani had resigned from the independent directorship of the company nine years earlier, it was a sufficient handle to beat him with.
For months, Kampani had to stay out of India, fearing arrest. It was only after his bete noire YSR met with a bloody death in a helicopter crash in September 2009 that Kampani could return home. In May 2010, rumours surfaced of Mukesh Ambani buying up JM Financial but they soon fizzled out.
Shortly before buying into ETV, Kampani had recently sold his stake in a joint venture with Morgan Stanley to his foreign partner for $440 million and had the cash. The Margadarsi bailout, it was assumed, was in his personal capacity. It took a petition in 2011 filed by YSR’s widow seeking an inquiry into Chandrababu Naidu’s assets assets for the penny to drop.
YSR’s widow, Y.S. Vijayalakshmi, an MLA, alleged that when gas reserves were found in the Krishna Godavari basin in Andhra Pradesh in 2002, the Chandrababu Naidu government wilfully surrendered its right over the discovery in favour of Reliance, “while allowing Naidu’s close associate Ramoji Rao to be the vehicle of the quid pro quo.” (page 32)
“In consideration for the favour done by the Respondent No. 8 (Chandrababu Naidu) in allowing the State’s KG basin claim to be brushed under the carpet, the Reliance group facilitated the payout of Ramoji Rao’s debts to his depositors. This was carried out through known associates and friends of Mukesh Ambani.
“Two of these known associates of Ambani and the Reliance Group are Nimesh Kampani (of JM Financial) and Vinay Chajlani (of Nai Duniya).
“Kampani extended himself in ensuring that Ramoji Rao would be bailed out. Within a short span of 37 days between December 2007 and January 2008, six “shell companies” were floated on three addresses, which are shown as Sriram Mills Compound, Worli, which is the official address of Reliance Industries Limited. Reliance diverted Rs 2,604 crores of its shareholders money through the shell companies to M/s Kampani’s Equator Trading India Limited and Chajlani’s Anu Trading.”
In other words, RIL’s involvement in Eenadu through Kampani became known only recently in response to Vijayalakshmi’s petition, but it was market gossip for quite a while.
T.N. Ninan, the chairman of Business Standard and the president of the editors’ guild of India, wrote in a column in January 2011:
“If reports in Jagan Reddy’s Saakshi newspaper are to be believed, Mukesh Ambani is a behind-the-scenes investor in Eenadu, the leading Telugu daily.”
Vijayalakshmi’s 2011 petition makes several serious allegations.
That Ramoji Rao entered into the deal with Kampani’s Equator just 23 days after it was registered although it had no known expertise or business; that Ushodaya sold Rs 100 shares to Equator at a premium of Rs 5,28,630 per share; and that Ushodaya’s valuation had been pumped up by Rs 1,200 crore by its claims over a movie library.
Vijayalakshmi’s petition concluded:
“The interest shown by Reliance group in coming to the rescue of Ushodaya Enterprises headed by Ramoji Rao is clearly in defiance of any prudent profit-based corporate entity (since) Reliance does not gain any returns by virtue of that investment.”
It is this RIL baby that is now in Network18/TV18’s lap.
The timing of the RIL-Network18/TV18-ETV deal also hides a small story.
It comes when the probe into the assets of Naidu and his associates (including Ramoji Rao) has moved from the High Court to the Supreme Court. It comes when a parallel probe into Vijayalakshmi’s son Jagan Mohan Reddy’s assets has entered a new and critical phase. It comes when the KG basin gas controversy is heating up. And, above all, it comes when 2014 is looming into the calendar.
Several questions emerge from this deal which has politics, business and media in varying measures:
1) What does it mean for Indian democracy when India’s richest businessman becomes India’s biggest media baron with control over at least two dozen English and regional news and business channels?
2) What kind of control will Mukesh Ambani have over Raghav Bahl’s Network18/TV18 when and if RIL’s optionally convertible debentures (OCDs) are turned into equity?
3) What kind of due diligence did the financially troubled Network18/TV18 do on the Kampani-Ambani investment in ETV before agreeing to pick up RIL’s stake for Rs 2,100 crore?
4) How will CNBC-TV18, which incidentally broke the news of the split among the Ambani brothers in 2005, report news of India’s biggest company (or its political and other benefactors) now that it is indirectly going to be owned by it?
5) Is there a case for alarm when one man has a direct and indirect stamp over three of the five major English news channels (CNN-IBN, NewsX and NDTV 24×7), three business channels (CNBC-TV18, IBN Awaaz, NDTV Profit), and at least five Hindi news channels?
6) Do Raghav Bahl and team who ran a handful of channels heavily into debt, have the expertise to run two dozen or more channels, especially in the language space where there are bigger players like Star and Zee?
7) Is the ETV network really worth so much, especially when Ushodaya’s most profitable parts, Eenadu and Priya Foods, are out of it? Or is RIL using Network18/TV18’s plight to turn a bad asset into a good one?
8) Is RIL really tying with Network18/TV18 with 4G in mind, or is this just spin to push an audacious deal past market regulators such as SEBI and the Competition Commission of India (CCI)?
9) How immune are Mukesh Ambani and Raghav Bahl from political forces hoping to use the combined clout of RIL-Network18/TV18 to blunt negative coverage ahead of the 2014 general elections?
10) And have Network18/TV18 investors got a fair deal?
Infographic: courtesy Outlook
Also read: The sudden rise of Mukesh Ambani, media mogul
The Indian Express, Reliance & Shekhar Gupta
Excellent piece! Great to see churumuri doing the kind of stuff that other journalism quiver in their boots just talking about!
Most of journalists are working as tout of capitalists.Even they ask money publish your grievance letter in newspaper.Journalist are working as a tout between government and industrialists form independence. Before that they tout of British government and capitalists.The medium of media is always deal with politicians and public so they must behaved as tout without that media cannot survive
Superb piece of writing.
kampani got 39% stake in Ramoji’s UEL for RS2600 cr with additional assets like movie library added, whereas blackstone offer was for 26% stake, so valuation of UEL by both kampani & blackstone is more or less same.
It’s true that ramoji helped NTR in his campaign, but to consider NTR politically naive without Ramoji is far from truth. NTR did all the hardwork travelling to the remotest corners of andhra, mesmerized people with his message with excellent political instincts and strategy
It all means one thing, illustrated here: Media Consolidation: The Illusion of Choice:
6 media giants control 90% of what Americans read, watch, or listen to.
232 media executives control the information diet of 277 million Americans
Just replace ‘Americans’ with ‘Indians’ and ‘GE’ with ‘RIL’.
One hell of a business thriller!……
This is not churumuri but Bisi bele bath.
So the new Guru(murthy) is Pritam Sengupta.
How much the ‘greed’ factor plays above their own kin and state is evident from this. They will all get their dues.
The name ‘Reliance’ is utter irony .
Well why blame the Amabanis when every one who has cash to splurge can procure the services of the media. Koestler termed the roving intellectuals propagating the good word about this cause or that the intellectual call girl circuit.Media are the “new cal girls” – they make their services available to any client who can pay .. Politicians know this , film stars know this , page three socialites know but best of all the chief minister of Bihar Mr. Nitish Kumar knows this. But best of all he indulges himself at the cost of the poor tax payer . Bihar Times says he splurged several crores on papers with as little as 1600 so that they could sing in his praise day and night.At the end of the day they have armor plated him to such an extent – the divine kawach and kundal-that stories related to his crass misdemeanors do not even get a fair hearing . A shocking story of institutionalized corruption and the dour cover up gets published in a small niche paper like Bureaucracy todayhttp://www.scribd.com/doc/77345384/Stealing-from-the-Poor-to-Give-to-the-Rich#source:facebook .
what is the mainstream media in Bihar doing . And Nitish owns no news papers. He only pays them regularly to publish the dramatic transformation of Bihar under his leadership and take out his king size photographs, and publish his (He has an imperial design) he only owns a few scores of editors and correspondents. Simple . You do not have to be an Ambani. Call girls come much cheaper these days.
Any sell recommendation of RIL stock would get you fired until now. After Ambani takeover, you would get killed.
Excellent piece! This is what differentiates Churumuri from others. This one sixer compensates for a the dull defending game you were playing this winter!
RIL and Mukesh Ambani are captains of corruption in India. They have almost taken over the State including Judiciary and Parliament !
i am happy that many Indians think in the fashion i think.
Please follow me on my Desaibankim’s blog
Very well written and researched. Opens up a lot of questions. Bloggers must be taken seriously by mainstream media.
>CNN-IBN‘s decision not to run the cash-for-votes sting operation in July 2008 revealed where its political predilections lay.
Aha, Hamam is a nice brand owned by lever ;-)
lev·er [lev-er, lee-ver] Show IPA
1.Mechanics . a rigid bar that pivots about one point and that is used to move an object at a second point by a force applied at a third. Compare machine ( def. 4b ) .
2.a means or agency of persuading or of achieving an end: Saying that the chairman of the board likes the plan is just a lever to get us to support it.
3.Horology . the pallet of an escapement.
I hope SEBI and CCI take a close look at this one. I am sure monopoly concerns could be raised here.
On the other hand #6 is an interesting point to note. Perhaps given the past history, the question in #7 should be whether this tie-up would turn a bad asset into a worse one.
Media in India is like “Taxi’s on hire”
Media , whether print or visual , is where we get our information from. The one who controls these controls our minds. Congress has used these devices for the last 75 years and will use all their power and Rajiv’s 196750 crores to ensure media ownership using the Ambanis, Raghav Bahls and Barkha Dutts of this world.
Item on Reuters:
RIL’s Mukesh Ambani & Shibulal of Infosys :
What matters the most ? Courage or tricks ?
When Suresh BV Bharadwaj of Bangalore, Karnataka compares Infosys CEO , Shibulal with Mukesh Ambani ,CEO of RIL he forgets that Shibulal has not earned his position by inheritance. The fact that RIL needs a magic baton to sustain is a sign of its potential weakness and inherent vulnerability to odds.Only the tricks of managing markets & stock exchanges can not sustain a company for ever.The fact that Mukesh Ambani has resorted to this buy back ploy itself is a proof that RIL shares are dwindling . Why should he buy back at the maximum upper limit of Rs.0870/- ? Why not at Rs. 1000/- or say Rs. 1200/-?Why the so called rich cash reserve should not be distributed among the shareholders in the form of bonus share ? The equity is raised & at the same time shareholders are benefited .Mukesh Ambani & his family as well as RIL board members will also be benefited as they too have stakes in the form of promoter quota shares.
i say if Government of India and all state governments withdraw political support and implement all present laws,rules & regulations strictly,Mukesh Ambani & RIL will shatter like a paper palace .i know for certain, the benefits he & his company derived from ‘friendship’ with the present and previous chief ministers of Gujarat . The said ‘friendship’ is populary construed in Gujarat as ‘CORRUPTION’.
If Govt of Gujarat implements Land Revenue Code as it does with other land owners, Mukesh Ambani will perspire in his centrally air conditioned office & bedroom ! If all laws are implemented he will be a prime beneficiary of the hospital run by his family !
You can’t blame anyone.. It’s game with a jungle rule – battle for survival.. This is why anti-Cong one is partnering with Pro-Cong duo under the guidance of Big Boss. It’s an old story with new characters in the play..
FINALLY kejriwal the one Indian with balls of steel takes on Mukesh ambani