Network18 buys Indian nets for $400m

Indian television group Network18 has acquired smaller local rival ETV’s channel assets in a deal worth nearly US$400m.

The deal comprises Eenadu Group-owned ETV’s news channels business. This includes 100% of Hindi-language nets TV Uttar Pradesh, ETV Madhya Pradesh, ETV Rajasthan and ETV Bihar, plus ETV’s Urdu channel.

Network18 has also acquired 50% in five other channels and 24.5% in a further two. Network18 subsidiary TV18 gains board and management control of ETV’s news channels and non-Telugu language general entertainment channels.

The acquisition is part of Network18’s push into local current affairs and entertainment programming. The firm already has a local joint venture with US media conglomerate Viacom, called Viacom18, which comprises channels such as MTV India, Nickelodeon India and Colors among others.

Network18 will pay 21bn rupees (US$395m) for the ETV nets. Both it and sister company TV18 Broadcast will offer rights shares to raise 40bn rupees to fund the deal, the company said in a filing today.

Ambali family-owned Reliance Industries will help Network18 founder and MD Raghav Bahl fund his part of the transaction and has set up an independent trust fund, Independent Media Trust, to do so, the filing added.

Furthermore, Reliance’s upcoming Infotel Broadband Network will be able to stream content from all Network18 media and web properties. Reliance’s television assets include local joint venture channels with CBS, via its Reliance Broadcast Networks subsidiary.

As a result of the acquisition, Network18 and TV18 will become debt free as some of the raised capital will go toward servicing the companies’ outstanding arrears.

Bahl will keep his 51% stakes in both firms. He said the acquisition would “catapult TV18 into the forefront of India’s broadcasting industry.”

“This is a truly seminal moment in the 18-year-old history of Network18/TV18. By inducting such a significant amount of equity, our balance sheets will become among the strongest in the industry. Also, by acquiring this strategic control over several ETV Channels, TV18 will have a bouquet of leading television channels,” said Bahl.

Ernst & Young advised Network18 on the deal.