Kings of convergence
According to recent reports, Mukesh has initiated moves to buy the Sun Group, whose tentacles extend from print, broadcasting, digital and radio to cable and DTH distribution. Although both RIL and Sun have vehemently denied it — an RIL manager informally told Tehelka that there were no talks with Sun — the duo may strike a strategic alliance. It could either be an equity one, where RIL buys a minority stake, or a content- and distributing-sharing one.
A recent article in www.newslaundry.com claimed that RIL might have clicked a deal with the NDTV Group, another major broadcaster, which is similar to the initial one with the Network18 Group before a formal takeover of the latter. A fully-owned subsidiary of RIL extended a Rs 403.85 crore loan to Shinano Retail, which is part of RIL Group, and the money was passed on to Vishvapradhan Commercial. The address of Shinano Retail and Vishvapradhan Commercial was the same when the deal happened.
The same year, Radhika Roy Prannoy Roy Private Ltd — the main promoter of the NDTV Group — received exactly the same amount, Rs 403.85 crore, as an unsecured loan. Although the firm’s balance sheet did not mention the source, the Income Tax Department claimed that the money came from Vishvapradhan Commercial. This was exactly the route that RIL adopted in the case of Network18. Later, in this case, the loan was converted into equity and formal ownership.
With ownership over a range of content, dissemination platforms such as cable TV, digital and telecom and the requisite infrastructure, the two Ambani brothers wish to achieve the kind of convergence that doesn’t exist anywhere in the world. As most of the developed nations have curbs on cross-media ownership, even the largest players cannot hope to have such an exhaustive and gigantic presence. However, Mukesh and Anil realise that they have to move fast in the near future.
Over the past few years, critics and regulators in India have clamoured for restrictions on cross-media ownership to stop the inevitable emergence of media monopolies and oligopolies. Some of them contend that this has already happened. Recently, the telecom regulator presented its recommendations on the issue to the Ministry of Information and Broadcasting. Although the government rejected them, the ongoing pressure may lead to changes in cross-media policies.
At present, there are several players who have similar media conglomerates like Mukesh and Anil or possess the resources to do so. But all of them, including the Ambanis, realise that they need to put their media empires in place before the cross-media curbs kick in. In such a scenario, the government will find it difficult to impose retrospective restrictions, and opt for prospective ones. The ones who manage to build monopolies quickly will be the clear winners in this media board game.