Reliance Industries has announced the consolidation of its media and distribution businesses. Following the restructuring, Network18 will house the broadcasting, cable and internet service provider (ISP) businesses. The cable and ISP businesses under Hathway and Den Networks will remain separate and wholly-owned subsidiaries of Network18. SP Tulsian of sptulsian.com and Abneesh Roy, senior vice-president of Edelweiss Securities discussed the mega merger in an interview with CNBC-TV18.

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Tulsian said, “Now there seems to be a serious play that content and carriage should be in the same company. Therefore, effective market cap of four companies after merger will be closer to Rs 13,000 crore and I don’t think there is time for smaller companies to exit even from operational point of view, cost control point of view and maybe synergy point of view."

Roy said that the combined entity will become the second-largest media entity in the country and improve cash flow management.

“After Star this will become one of the largest media companies in India and cash flow wise also it’s good because the distribution business will need cash while the broadcasting business will throw cash. So within the same company better cash flow management," he said.

Roy added, “For investors yes, larger entities will be better. And in media, we have seen massive erosion across companies. So, this will become around Rs 8,000 crore of revenue and marketcap of Rs 13,000 crore. So much larger scale versus currently 4 different entities.”

Roy said, “The good part is related party transactions will be addressed because it will be part of same entity and simplified structure.”

Disclosure:

Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

First Published:Feb 18, 2020 9:58 AM IST