Sony eyes up to 30% stake in Mukesh Ambani's Network18 after Zee bid failed

Mukesh Ambani, RIL Chairman
Japanese major Sony Corporation is in preliminary talks with Mukesh Ambani’s Network18 Media & Investments for a possible stake buy, making it the second attempt by the group in 10 months for a local acquisition. 

In March, Sony had emerged the front runner to acquire a 20 per cent stake in Zee after the promoters of the latter said they were ready to offload up to half their shareholding to a strategic investor.

The talks had eventually fallen through over a valuation mismatch, forcing the Japanese major, which runs a bouquet of entertainment channels in the country, to look elsewhere, said persons in the know. Apart from a stake buy, some other options on the table include a merger of the entertainment businesses of Sony and Network18 Media, they said, as the Japanese major seeks to consolidate its presence in India, a market it considers key.

Sony, said sources, is expected to evaluate its options carefully owing to regulation around foreign direct investment in media. While 100 per cent FDI is permitted in the entertainment broadcast business here, FDI in news media is capped at 26 per cent, both in the broadcast and digital segments.

Source: Bloomberg
Sony may go for a 25-30 per cent stake in Network18, said persons in the know. Network18’s FY19 gross debt stood at Rs 3,045 crore, while net debt stood at Rs 2,860 crore. Based on Thursday’s close, Network18’s market capitalisation stood at Rs 2,900 crore, the data from the BSE shows.

Network18 has a presence across entertainment and news broadcasting with subsidiaries such as TV18 (news) and joint ventures such as Viacom18, where it holds 51 per cent stake.

WHO GAINS WHAT
  • Sony and Network18 both become powerful in general entertainment
  • Can take on Star-Disney and Zee, critical for Sony
  • On digital side, Sony channels can ride on Jio platform
  • Network18 gets access to Sony’s content

An e-mail sent to Sony Pictures Network elicited no response till the time of going to press. A spokesperson for Reliance Industries, the holding company of Network18, said: “Our firm evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations 2015 and our agreements with the stock exchanges.”

Experts said the two firms could exploit synergies if they came together. One is the collective might on the television broadcasting side where both Sony and Network18 are key players.