Reliance Industries announced on May 29 that its board has approved the acquisition of a controlling stake in Network 18 Media & Investments, including its 51% subsidiary TV18 Broadcast and associate company Infomedia Press; together the group owns internet properties, e-commerce businesses and broadcast content. The board has approved funding of up to Rs40bn for the acquisition. The deal, to be done through a wholly owned subsidiary of RIL.
With this deal, Reliance Jio moves closer to convergence of telecom, media and internet in its business model, giving it a competitive edge. With control over Network 18, apart from competing with telecom players, RIL could also look at the markets of DTH operators.
Given the relatively small size of the deal – incremental cash investment of Rs33.5bn vs. RIL’s overall balance sheet of Rs4,709bn in FY15E, even assuming no contribution from new assets, RIL’s return profile remains unchanged.