The owner strikes back

Lets face it, media-- as in journalism-- is pretty much a losing proposition these days in India.  For those who launch and run it, and sometimes for those who invest in careers in it.  But in the short term, until the debts pile up,  it is a glory run, particularly for those  who front TV channels.

 TV news in particular costs too much and earns too little in a crowded market to be sustainable.  For the early entrepreneurs such as Raghav Bahl who floated TV 18 and Prannoy Roy who launched New Delhi Television,  it has meant riding successive cycles of contraction and expansion, linked to how the economy was doing. Their stocks rose and fell in value.  With competition exploding valuations came down and even contracting by disinvesting became a challenge. 

Television then has become less about great journalism and more about histrionics onscreen, belt tightening  off-screen, and expansion into showbiz where the returns are better.  But even with some winning films  and a successful channel like Colors, a canny and ambitious entrepreneur like Raghav Bahl saw his empire melt into debt.

Mint’s long graphic account  in its May 30 issue describes the circumstances leading up to yesterday’s  (May 29) announcement  by Reliance Industries Limited of its decision to invest Rs 4000 crore in acquiring Network 18 and TV 18.  As he sank deeper into debt (Rs1400 crore by 2011) Bahl made a fatal choice that year despite the deep reservations of his then CEO.  He opted to ask the country’s wealthiest industrialist Mukesh Ambani for a bailout rather than divesting stake in his  entertainment venture with Viacom to raise money.

Up until January 2012 Mukesh Ambani of the Reliance Group, unlike his brother Anil, had no formal stake in any media house. He had made surrogate investments in Ramoji Rao’s ETV through investment banker  Nimesh Kampani ,  he was believed to have   'helped’  both  a major newspaper and a prominent news channel in their  hour of need,  and he had invested through surrogates in NewsX  and Nai Dunia.   

It has taken just 2 and a half  years for the tenuous proposition created  by the bailout of the Network 18 by Mukesh Ambani to dissolve into a virtual takeover of the media  conglomerate. The cost of sustaining this network and paying TV personnel fancy salaries the like of which even top management at Reliance did not get,  was getting to the benefactors.

The 2013 bloodbath which led to the retrenchment of upto 500 employees in the TV news part of the business, was a precursor. (The cost cutting helped shore up the company’s bottom line so that Network 18 turned in a profit by the first quarter this year.)   Those with ownership stake such as Bahl and his wife Ritu Kapur,  and Rajdeep Sardesai and Sagarika Ghose of CNN IBN, survived that round but  are now expected to be moving on.

Top management has left in the last few days after it became clear that Ambani now wanted to bring in his own managers.  The top editorial staff  are waiting to see what is in the store for them.

Mr Ambani has too much at stake in the system to allow the news channels the  luxury of complete editorial independence. One of the recent irritants in the run up to RIL’s formal takeover of  Network 18 and TV 18 has be;en the coverage of AAP by  these  channels. It was galling for Mukesh Ambani to see  the leaders of the party such as Prashant Bhushan being given space to air their views on CNBC TV 18 and CNN IBN,  after Arvind Kejriwal had launched such a direct attack on him in the run up to the elections, leveling allegations of  favourable treatment from the Government in the matter of gas pricing.  He  held off doing anything about until  the election results were out and it became clear that AAP had not established any significant political hold.

Paranjoy Guha Thakurta who contributes to the Hoot suggests that the election results  would have been the trigger for deciding to take control of this influential media network and just be in charge from now on, of how the Modi Sarkar would  be handled by it. 

Then there is media as in content, which is supposed to be entirely a winning proposition. The ostensible reason given for the acquisition is that the bouquet of properties owned by Network 18 add up to a huge windfall for the launch of Reliance’s Jio, the 4G broadband service which will offer news, movies, TV—you name it---on the go.  When media is primarily content for 4G,  the   independence of the  journalism involved should  matter less.

The holding company set up in January 2012 to channel Reliance funds to Network 18 was called the Independent Media Trust.  Whoever thought up the name had a delicious sense of irony. 

As Mukesh Ambani’s trusted men move in to take charge,  the journalists who   choose to continue in Network 18 will have to become artful survivors.   They are not the only ones learning that skill. Look around at who owns media these days. 

But the  big mystery which remains is why media ownership fascinates someone like Mukesh Ambani. Even his surrogate ownership adventures led to an investigation by the Serious Fraud Investigation Office of the Department of Company Affairs.  If there is one thing owning media has not got the man who has it all, it is a good press.